Sen. Elizabeth Warren puts Chase CEO Jamie Dimon in hot seat on overdraft fees

Jamie Dimon, JPMorgan Chase CEO, along with bank CEOs of the five other largest banks in the U.S., testified before the Senate Banking Committee on Wednesday, May 26. A focus was overdraft fees, which banks continued to charge during the pandemic despite additional flexibility from regulators. Sen. Elizabeth Warren (D-Mass.) was particularly hard on Chase, which she said collects more than 7 times as much money in overdraft fees per account than its competitors.

Why should we care?
Overdraft fees, a source of revenue for banks, are at the center of a debate around whether they’re predatory and unfairly penalizing customers. Earlier this month, Bank of America agreed to a $75M settlement in a lawsuit regarding overdraft fees. Warren said banks collectively levied $4B in overdraft fees last year, and of that number, Chase collected nearly $1.5B. According to Warren, this happened despite the fact that regulators eased requirements, allowing lenders to forgive overdraft fees. Dimon countered that the bank waived overdraft fees for customers who requested refunds due to financial hardships, but declined to offer a specific figure. He also did not commit to refunding overdraft fees. Some banks and fintechs say they’re helping consumers get on a stronger financial footing by helping them reduce their overdraft fee burden. PNC Bank, for example, recently rolled out a feature called “low balance mode,” which offers customers in danger of going into overdraft 24 hours to take actions to remedy the situation. The bank says it expects this offering will cut customers’ overdraft fees about 60%, and shrink its annual revenue by $125M to $150M.