The US Consumer Financial Protection Bureau (CFPB) has asked a Texas federal judge to formally drop the $8 late fee cap rule, which was a key piece of President Biden’s antijunk fee agenda. The move is seen as a victory for business groups, who claimed the rule was an overreach.
In December, Judge Mark Pittman, a Trump appointee, blocked the rule, citing it as a violation of the Credit Card Accountability and Disclosure Act. This law allows for reasonable penalty fees tied to costs, not a hard ceiling.
The CFPB’s decision to drop the cap is part of a broader effort to weaken the agency without triggering a full legal showdown. A federal appeals court has already cleared the path for trimming CFPB staff.
For markets, the removal of the late fee cap matters because it opens up a lane for higher margins. Credit card stocks such as Capital One and American Express are likely to benefit from this regulatory clarity. With the cap gone, earnings from late fees will be safer for now, making them a bullish indicator heading into earnings season.
Source: https://finance.yahoo.com/news/trump-just-handed-credit-card-135501177.html