Federal judge temporarily blocks Biden's plan to cap credit card late fees at $8

A Texas federal judge temporarily stopped the Biden administration's plan to lower credit card late fees to $8, which was set to go into effect this week. 

Judge Mark Pittman, a Trump appointee to the Northern District of Texas Federal Court, issued a temporary injunction, or pause, on the Biden administration's plan, in a move that is a win for credit card companies and banks, The Associated Press reported Friday.

While the average credit card late fee is $32, the Consumer Financial Protection Bureau regulations would have limited late fees to $8 or required banks to show why late fees needed to be more than $8. The bureau estimates that late fees allow banks to bring in about $14 billion every year. 

"We are disappointed that a court sided with House Republicans, big banks and special interests to hit pause on a critical measure to save American families billions in junk fees," White House spokesperson Jeremy Edwards said Friday.

Banks sued to stop the order earlier this year, but they faced difficulties when Pittman ordered the case to Washington, D.C., due to the fact that few banks are located in northern Texas. Most of his decision was reversed by an appeals court, and Pittman was ordered to rule on the injunction request, which he granted. 

Critics of the lawsuit say the case is an example of "forum shopping," where parties choose to file lawsuits in districts with courts that are more likely to issue a favorable ruling.

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