March 7 was a great day for the Cato Institute’s Center for Monetary and Financial Alternatives. While I testified before Congress to defend financial freedom, Norbert Michel was testifying at the same time just down the hall to defend financial privacy. For my part, I warned Congress of the dangers of enacting price controls on financial services.
For those who have not been following the news, the Consumer Financial Protection Bureau (CFPB) has proposed price controls for credit card late fees, overdraft fees, and nonsufficient fund (NSF) fees as part of President Biden’s “war on junk fees.” In total, the CFPB claims these proposals will reduce revenue for financial institutions by more than $12.5 billion per year. As I’ve explained on this blog and in my testimony, these proposed restrictions are likely to result in either a reduction of services or higher costs elsewhere. Neither case is an improvement for consumers.
Yet, this “war on junk fees” goes far beyond financial services. As my colleagues Ryan Bourne and Sophia Bagley have documented, the president’s proposed restrictions cover fees for airplane seating, event tickets, hotels, resorts, funeral homes, early contract terminations, and more. If you find it difficult to see the connection between these fees, you’re not alone. Bourne and Bagley also pointed out that there is “no firm definition of ‘junk fees’ the administration is sticking to” and “the aims of anti-‘junk fee’ policies are often explicitly contradictory.”
Luckily, for those concerned about the future of free markets, Bourne’s latest book, The War on Prices, is set to come out on May 14. The book offers a complete resource for anyone interested in learning what prices are, how they work, and why it’s important to push back against government policies seeking to distort them.
The War on Prices is available for pre‐order here and will be released on May 14, 2024. In addition to myself, contributors include Brian Albrecht, Pedro Aldighieri, David Beckworth, Eamonn Butler, Vanessa Brown Calder, Michael Cannon, Jeffrey Clemens, Bryan Cutsinger, Alex Edmans, Peter Jaworski, Pierre Lemieux, Deirdre McCloskey, Jeffrey Miron, Liya Palagashvili, Joseph Sabia, J. R. Shackleton, Peter Van Doren, and Stan Veuger