The Biden administration has finalized a rule limiting overdraft fees banks can charge, as part of the White House’s campaign to reduce junk fees that hit consumers on everyday purchases, including banking services. President Joe Biden had called the fees, which can be as high as $35, “exploitative,” while the banking industry has lobbied extensively to keep the existing fee structures in place.

Under the finalized rule announced Thursday, banks will be able to choose from three options: they may charge a flat overdraft fee of $5, they may charge a fee that covers their costs and losses, or they may charge any fee so long as they disclose the terms of the overdraft loan the way they would for any other loan, typically expressed as an annual percentage rate, or APR.

While banks have cut back on overdraft fees in the past decade, the nation’s biggest banks still take in roughly $8 billion in the charges every year, according to data from the Consumer Financial Protection Bureau and bank public records. Currently, there is no cap on the overdraft fees that banks can legally charge.

Right now, when a bank temporarily lends a consumer money when their account has reached a zero balance, the consumer is typically responsible for paying back both the overdrawn amount and an additional fee, which can be more than the original amount charged. In one example often cited by opponents of the fees, a $3 cup of coffee can end up costing someone more than $30.

The finalized rule is set to take effect in October 2025, but the incoming Trump administration has yet to tap anyone to lead the CFPB, and has mentioned the idea of eliminating the agency.

The finalized rule applies to banks and credit unions that have more than $10 billion in assets, which includes the nation’s largest banks. Banks have previously sued the CFPB over these rules and caps on credit card late fees, and are likely to sue again. Congress also has the ability to challenge or overturn the rule.

The agency estimates the new rule would save consumers about $5 billion in annual overdraft fees, or $225 per household that typically experiences the fees.

— Associated Press

Wholesale inflation spikes sharply in Nov.

Wholesale costs in the United States picked up sharply last month, signaling that price pressures are still evident in the economy even though inflation has tumbled from the peak levels it hit more than two years ago.

The Labor Department reported Thursday that its producer price index — which tracks inflation before it reaches consumers — rose 0.4% last month from October, up from 0.3% the month before. Measured from 12 months earlier, wholesale prices climbed 3% in November, the sharpest year-over-year rise since February 2023.

Excluding volatile food and energy prices, so-called core producer prices rose 0.2% from October and 3.4% from November 2023.

Higher food prices pushed up the November wholesale inflation reading, which came in hotter than economists had expected. Surging prices of fruits, vegetables and eggs drove wholesale food costs up 3.1% from October. They had been unchanged the month before.

ECB cuts rates amid weakened growth

The European Central Bank has cut rates by a quarter percentage point amid signs of weakening growth and concern about the impact of political chaos in France and the possibility of new U.S. import tariffs after Donald Trump takes office as president.

The bank’s rate-setting committee made the decision Thursday at its skyscraper headquarters in Frankfurt to lower the benchmark from 3.25% to 3%.

Bank President Christine Lagarde said that efforts to drive down inflation toward the ECB’s 2% target were succeeding, making room to cut rates

She said the bank now foresaw “a slower economic recovery” than it did in a last set of projections in September.

Inflation has fallen steeply to 2.3% from its peak of 10.6% in late 2022, shifting attention from reigning in consumer price increases to worries about ongoing weak growth.

Court strikes Nasdaq board diversity rule

An appeals court in Louisiana has ruled that Nasdaq can’t require diversity on the boards of companies that list on the exchange.

The decision comes more than three years after the Securities and Exchange Commission approved Nasdaq’s proposal to boost the number of women, racial minorities and LGBTQ people on U.S. corporate boards.

Some conservative groups and Republican lawmakers have strenuously opposed the proposal, arguing the requirements were arbitrary and burdensome.

And on Wednesday the Fifth U.S. Circuit Court of Appeals in New Orleans decided that the proposal was not legal.

IRS announces recovery of $4.7B in back taxes

IRS leadership on Thursday announced that the agency has recovered $4.7 billion in back taxes and proceeds from a variety of crimes since the nation’s tax collector received a massive glut of funding through Democrats’ flagship tax, climate and health law in 2022.

The announcement comes under the backdrop of a promised reckoning from Republicans who will hold a majority over both chambers of the next Congress and have long called for rescinding the tens of billions of dollars in funding provided to the agency by Democrats.

On a call with reporters to preview the announcement, IRS Commissioner Danny Werfel said improvements made to the agency during his term will help the incoming administration and new Republican majority congress achieve its goals of administering an extension of the 2017 Tax Cuts and Jobs Act.

Republicans plan to renew some $4 trillion in expiring GOP tax cuts, a signature domestic achievement of Trump’s first term and an issue that may define his return to the White House.

— From news services