To Whom It May Concern:

My name is Nicholas Anthony, and I am a policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives. I appreciate the opportunity to provide input to help the Consumer Financial Protection Bureau (CFPB) better understand the ramifications of its proposal to prohibit financial institutions from charging fees “when consumers initiate payment transactions that are instantaneously declined.” The Cato Institute is a public policy research organization dedicated to the principles of individual liberty, limited government, free markets, and peace, and the Center for Monetary and Financial Alternatives focuses on identifying, studying, and promoting alternatives to centralized, bureaucratic, and discretionary monetary and financial regulatory systems. The opinions I express here are my own.

****

The CFPB’s approach in this proposal raises significant concerns and is fundamentally flawed. It is understandable that the CFPB may be under considerable pressure to act given it has become a cornerstone of President Joe Biden’s “war on junk fees,” but that is not a justifiable reason to push through restrictions on the freedoms of the American people.

As it currently stands, the argument in the proposal appears to be that the CFPB is concerned that harms may take place and thus it seeks to preemptively prohibit participation in charging what the CFPB defines as covered nonsufficient fund (NSF) fees. By working backwards from a predetermined conclusion, the proposal seemingly undermines the importance of financial literacy and responsibility while also painting a caricature of the financial system.