We all know about the cost-of-living crisis. We read about it in the news and feel it as we go grocery shopping or try to find affordable housing. To make matters worse, needless bank fees have been creeping up too, draining over $25 billion each year from American bank accounts. 

To protect consumers from these extractive banking practices, the Consumer Financial Protection Bureau (CFPB) announced rules in January and March to restrict large banks from charging excessive overdraft and credit card late fees. In addition to reducing inequalities perpetuated by the banking system, these restrictions align with Jewish values of fair lending, and provide a lens through which to examine tzedek and historical Jewish stereotypes around banking.

The stereotypes behind Jewish bankers have remained relatively consistent over time, focusing on a conspiracy in which Jewish masterminds control finance and wider society. With roots in the Middle Ages, when Jews were banned from most occupations except for banking, and Christians often couldn't be bankers due to usury laws, the stereotype has continued into modern rhetoric and assumptions around Jewish intersections with banking. 

Despite the pervasive negativity around Jews in banking, actual Jewish values around banking reveal a prioritization of justice and empathy in financial practices. Fundamental to the Jewish perspective on banking is the idea of tzedek, a Hebrew word that roughly translates to justice infused with compassion. Tzedek is both a concept to be pursued and a way of living, a contract that Jews enter into with God to make the world a better place. Tzedek calls on Jews to act with integrity, not just for the present moment, but for the future society we can create. It is through this forward-looking perspective on justice that Jewish financial morals are grounded: in Biblical times, every seven years, Israelites would forgive debts, and every fifty years, a large social redistribution of wealth would ensure that no families were trapped in a cycle of poverty.

Today, societal structures across the globe prioritize profits and depart from this vision of forgiveness and renewal. Take, for example, the outsize fees charged by banks for overdraft or late credit card payments. Today, overdraft fees, at an average of $35, are levied on consumers who, on average, spend $26 or less and who repay the overdraft within three days. What's more, lower-income households are charged at a rate three times higher than higher-income households. These fees become a “poverty tax” paid by low-income families simply because they lack the resources of the wealthy. Meanwhile, it costs banks about $3 to extend overdraft. Even worse, banks routinely reorder transactions to maximize overdraft fees.

 You can see a similar story in the data on credit card late fees, which cost consumers as much as three times what it costs the bank to provide the service. Credit card late fees serve as an additional punishment to consumers in a bundle that can include credit score reduction, interest rate increases, credit access reductions, and more. Once again, these fees disproportionately harm low-income credit card users and people of color. The outsize harm inflicted particularly on low-income households is not just a result of increased late payments, but also increased fees on payments, with lower-income households paying more for each late fee than higher-income households.

These fees also exacerbate gender inequalities: women are more likely to be charged overdraft fees, and to have multiple fees withdrawn than men are. That’s because women in America are more likely to experience poverty than men, and continue to face a pervasive wage gap. The accumulation of these biases funded by banking fees points to a dearth of tzedek within the banking system and a need for wider change. 

Banks and their lobbying organizations have gotten up in arms about the new CFPB regulations, going so far as to file a lawsuit in Texas against the credit card rule. While everyone should be concerned about banks' efforts to overturn the CFPB’s rules, Jews should pay particular attention. As the Torah commands: “tzedek, tzedek tirdof” —“Justice, justice you shall pursue.” To me, being Jewish means standing up against oppressive and biased systems that perpetuate historical wrongdoings. It means adhering to a moral contract that puts justice above profits. With this latest legislation, the CFPB is pursuing tzedek. We must stand with them, telling lawmakers why this matters and taking this chance to create a more just world.