Protect Military and Federal Employees from Unfair Bank Fees Act
- Bill Number
- H.R. 5953
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-11-07: Referred to the House Committee on Financial Services.
- Last Updated
- 2025-11-19T13:23:05Z
AI-Generated Summary
Purpose
The "Protect Military and Federal Employees from Unfair Bank Fees Act" aims to shield federal civilian employees, military personnel, and uniformed service members from certain bank and credit card fees during government shutdowns, when they may be furloughed (temporarily laid off) or required to work without pay due to lapsed appropriations.
Key Provisions
- Prohibition on Bank Fees for Insufficient Funds: Financial institutions (banks or similar entities handling electronic transfers) cannot charge fees on accounts held by affected individuals for insufficient funds or rejected debits (automatic withdrawals) during a shutdown period.
- Prohibition on Credit Card Late Fees: Credit card issuers cannot charge fees or penalties for late payments if the due date falls during a shutdown period. This applies to standard credit cards and government-issued purchase cards used for official purposes.
- Definitions:
- Covered period: Any time when Congress has not passed funding (appropriations) for one or more federal agencies, leading to a partial government shutdown.
- Covered person: Civilian federal employees, members of the Armed Forces, or uniformed services (e.g., Coast Guard, Public Health Service) who are either furloughed or working without pay during the shutdown.
- Other terms like "account," "financial institution," "card issuer," and "credit card" are defined by existing federal laws, such as the Electronic Fund Transfer Act and Consumer Credit Protection Act, to ensure consistency.
Significant Changes to Existing Law
This bill introduces new restrictions on fee imposition by tying them specifically to government shutdowns, which is not addressed in current consumer protection laws. Previously, banks and card issuers could charge standard overdraft, nonsufficient funds (NSF), or late payment fees without such exemptions, even during financial hardships like shutdowns. It builds on but expands protections under laws like the Electronic Fund Transfer Act by creating targeted relief for federal workers.
Potential Impacts
- On Citizens: Provides financial relief to affected federal and military employees by preventing fee accumulation during pay disruptions, potentially reducing debt and stress for hundreds of thousands of workers (based on past shutdowns affecting over 800,000 people).
- On Government Agencies: Indirectly eases administrative burdens on agencies like the Office of Personnel Management, which handle furlough notifications, by reducing employee financial complaints related to fees.
- On Financial Institutions and Businesses: Banks and credit card companies lose revenue from these specific fees during shutdowns, which could be minimal but might encourage them to adjust policies or offer voluntary waivers. No direct impact on international relations.
- Broader Economy: Could mitigate minor economic ripple effects from shutdowns by helping workers maintain financial stability, avoiding issues like credit score damage.
Main Stakeholders Affected
- Primary Beneficiaries: Federal civilian employees, active-duty military, and uniformed service members impacted by shutdowns (e.g., Department of Defense personnel, IRS staff).
- Regulated Entities: Financial institutions (e.g., banks like Chase or Wells Fargo) and credit card issuers (e.g., Visa, Mastercard networks, or government card providers).
- Oversight Bodies: The Consumer Financial Protection Bureau (CFPB) and federal banking regulators, who may need to enforce compliance and handle potential disputes.
- Government: Congress and executive agencies, as the bill addresses consequences of funding lapses.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens consumer protections under existing statutes without altering core banking regulations; enforcement likely falls to the CFPB, with potential civil penalties for violations. It avoids retroactive changes, applying only prospectively.
- Constitutional: Aligns with Congress's authority under the Commerce Clause to regulate financial transactions, as fees involve interstate commerce. No apparent First Amendment or due process issues.
- Political: Highlights bipartisan interest in mitigating shutdown harms (introduced by Democrats but applicable broadly); could influence budget negotiations by increasing political costs of delays, though it does not address shutdown causes directly. If passed, it sets a precedent for targeted relief in fiscal crises.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Rep. Elfreth, Sarah [D-MD-3], Rep. Walkinshaw, James R. [D-VA-11]
Recent Actions
- 2025-11-07: Referred to the House Committee on Financial Services.
- 2025-11-07: Introduced in House
- 2025-11-07: Introduced in House
Bill Versions
- Protect Military and Federal Employees from Unfair Bank Fees Act — issued 2025-11-07 — PDF (3 pages)