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 assist the Consumer Finance Protection Bureau (CFPB) in its effort to reconsider credit card penalty fees under Regulation Z. 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.

Put simply, the CFPB’s proposal to eliminate the option to adjust fees for inflation and restrict late fees at $8 would be a step in the wrong direction.

Eliminating Inflation Adjustments Would Be a Mistake

The CFPB’s proposal to eliminate inflation adjustments within the current safe harbor is concerning given it sets a poor standard for governance and contradicts the CFPB’s own arguments elsewhere in the proposal.

It is understandable that the CFPB has inflation in mind given that inflation has been so high in recent years. However, the fact that inflation can change suddenly and dramatically is evidence that laws and regulations should include inflation adjustments when dollars are referred to.