Dems Seek to Curb Banks' Overdraft Fees

Barney Frank, Chris Dodd Call for Bill to Require Banks to Ask Customers About Overdraft Protection

(AP)  Senior congressional Democrats say legislation is still needed to limit how lenders charge customers who overspend on their accounts, even though some big banks have already curbed high-fee overdraft programs.

Rep. Barney Frank, the chairman of the House Financial Services Committee, on Friday joined Senate Banking Committee Chairman Chris Dodd, D-Conn., in calling for legislation that would require banks to ask customers whether they want overdraft protection.

"Don't do favors for people without asking them," said Frank, D-Mass., at a hearing on a House overdraft bill introduced by New York Democratic Rep. Carolyn Maloney.

Most banks automatically allow customers to overdraft their accounts, then charge them $25 to $35 per infraction. Banks say that customers want the protection, rather than being denied a purchase at the cash register.

In recent weeks, several major U.S. banks, including Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co., have said that they will allow customers to "opt out" of their overdraft programs.

The House and Senate bills under consideration would go further by requiring that fees be proportional to the cost of the overcharge. The legislation also would prohibit banks from imposing more than one overdraft fee a month, or six per a year.

But the new policies seemed too little, too late for federal regulators and lawmakers who say tougher rules should be imposed.

By the end of the year, the Federal Reserve is expected to issue new regulations on overdrafts. Congressional Democrats say they want new rules codified into law.

During Friday's hearing, consumer advocates hailed the proposed law while bank representatives said it was unnecessary.

Michael Menzies, president of Maryland's Easton Bank and Trust Company, said eliminating overdraft protection for many customers will mean denying charges and embarrassing customers or forcing them to rely on high-cost payday lenders.

"While community banks always seek to treat customers honestly, the same expectations must hold true in reverse: customers should not and generally do not expect a free pass when a bank covers their overdrafts," Menzies said.

[beckw1js]

I think theres a corner of this issue that a lot of people are ignoring. The fact that the proportion of the fees are getting to the point that they are EXCESSIVE FINE AND FEES, when calculated the way they are. For instance, this recently happened to me. After overcharing at a total
of $2.50 through three small charges, I got charged with $108.00. I told the bank, I would understand a $15.00 charge, but when I only make $1400.00 max income (student, and father), I cant aford 10% of my budget being removed. Luckily they were understanding, but personally I would rather be charged $15.00 then have to even come in and talk about it. 10 times the overdraft is still steep, but if it was 10 times, or 20 bucks, whichever was lowest I would think it would be fair. And honestly if I am going to be charged that much money to overdraft, its better for me to be denied at the register. My budget cannot afford this kind of beating. It causes a chain reaction, where my budget keeps getting worse and worse, even though im sacrificing more and more to try to get my budget under control. And then recently, I had an incident, where I had $500.00 banked, and then wrote a check for $700.00, Ran to the bank, deposited $700 cash in the ATM (one right after the other, so there was no way the check was recieved before the deposit, and the bank was closed at the time, so they recieved the debit and credit next day), then my wife deposted $300.00 the next day. Unfortunetly though, they charged ALL my debits before my credits, so I was charged with $288.00 in overdraft fees its. AND if you look at my statement, you can see the $1000.00 deposit the DAY that the $288.00 overdraft fees went into place. But in the statements they added credits before debits, so it seems to start charging overdraft fees, even with a positive balance. AND THEN, because of that, even though we budgeted, and did not over spend, the $288.00 that we should not have been charged in the first place, put us under again, a few days later when I payed two of my credit card bills to keep them under control. Total Over draft, approximaitly $500.00, 1/3 of my total income for the month, total over charged according to my statement $0.00.

[SocietysNightmare]

Stop grandstanding, Congress! All I here these days is "talk" of dealing with issues such as these. I wish the press would stop giving audience to it. Banks are declining rapidly. As such, they are creating ridiculous new fees to cover their losses from the new credit card legislation. Consumers need to use their power anyway as opposed to looking for the govt. to rescue you. If we stop using banks, this silliness will stop.

[Solarrays247]

"Most banks automatically allow customers to overdraft their accounts, then charge them $25 to $35 per infraction."


That's a bargain! I just read where one of our local banks charges $40 per infraction. I can't imagine what that would do, especially to many young families' budgets if someone makes a mistake in their account. Ouch!

[rmcbee1969]

Not everyone that gets hit with overdraft charges deserves them. What about when you deposit cash, the deposit is "held" overnight, during that time a check comes through (written and dated after deposit was made same day) along with 6 debit transactions (there was already money in the bank to cover these prior to cash deposit). By the morning they have returned the check, cleared the 6 debit transaction hitting you with 7 overdraft fees ($37.50 ea.). The cash was deposited into the account PRIOR to the check being presented. The way I see this is the bank had no reason to "hold" a cash deposit, they then let the check go through first, then they sent through the 6 debit transactions, then they cleared the deposit, in that order. How does this make any sense? I did not spend money that I did not have. If I had then I deserve to pay the price for that.

[cdegolier]

Fine let the banks lower the fees or better yet let the banks simply deny you if you are over and let your checks bounce. It's not the banks fault you over draw your account, it is yours. PERSONAL RESPONSIBILITY!!

[cdegolier]

Fine let the banks lower the fees or better yet let the banks simply deny you if you are over and let your checks bounce. It's not the banks fault you over draw your account, it is yours. PERSONAL RESPONSIBILITY!!

[steeepe]

Too little too late. The banks charge usurious interest rates. Those are killing people. The "reform" doesn't go into effect until 2010, and banks have exploited the stupid delay, as anyone with any sense could have foreseen, unless they were bought off and didn't care.

[stn_sage]

I'll keep saying it, these 'laws' are BOGUS!

In this case, it's designed to protect the banks' usurious charges, while lending 'lip-service' to the IDEA of protecting the public in WORD and not DEED...if they were sincere, they'd limit the charge to a couple bucks a draft, and implement it December 1, 2009!

But...the WON'T do that...because it would be HELPING the public...and that's not what Congress does!

[jsd330]

stn_sage Watch the health insurance providers do the same thing, before health insurance reform goes into effect.

[hungry1968-17]

by intheusa October 30, 2009 4:36 PM EDT

By the way a little hint 1st word begins with a B last word with an A and middle word has 2-letters.







I paid off a car loan 23 months early, and took away $578 in interest when I did it.

F THEM!

[intheusa]

Thats funny a statement from the bank representative saying that banking fee legislation is unnecessary. The recent increase in profits are from all those fees and overdraft charges.

A few years ago I set up a 3rd checking account with the understanding that this account had no overdraft protection and even asked the question at my bank 3 times. I only carried a maximum of $500 in this account and threw away the checks. This protected me I thought to an immediate loss of only $500 should a thief get the card and pen number.

That got tested recently and the bank was paying overdrafts on the ATM charges anyway. They claim they did that as a courtesy (+$35) at a pop. Before I caught it they had $140 of charges racked up on ATM purchases of as little as $22.00

I told them the only way this was gone to stay out of court (press invited) was to refund all those charges. Let me say I'm no deadbeat and been with this bank for 30 years.

By the way a little hint 1st word begins with a B last word with an A and middle word has 2-letters.

[inketolstoy]

Boy am I releived to see that Barney Frank and Chris Dodd will be defending me from abuses by banks. Next thing you know tax cheats will be in charge of the IRS and the committee that determines tax laws in congress. Washington politicians, my knights in shining armor.

[sunday42]

When did balancing your check book and not over spending your checking account become a thing of the past? I think the banks should charge even higher rates for overdrafts. Why does a bank have to give you what amounts to a loan and not receive interest on it? And yes, put Barney Frank and Dodd in to protect us. Yea, right.