Support for O.D. Fee Restraints Posted by AVCU on 4:14 PM

U.S. Senate Banking Committee member Charles Schumer (D-N.Y.) said this week that he wants more consumer protections associated with overdraft protection plans and will back legislation targeting abusive practices. Stories surfaced this week that bank profits for checking/ATM overdraft fees now surpass those of credit cards. In 2009 banks are expected to garner $27 billion by covering overdrafts on checking accounts. Schumer says overdraft legislation should:

• Require consumers to opt in, or have a chance to opt out, of overdraft protection programs;
• Increase disclosure of fees and APR charges on overdraft loans;
• Require a warning when an electronic transaction may trigger an overdraft loan fee;
• Prohibit financial institutions from manipulating the order in which checks and other debits are posted if it causes more overdrafts and fees;
• Require proportional fees so that a fee for a nickel overdraft is lower than a fee for a $100 overdraft.

Legislation introduced in the House by N.Y. Democrat Rep. Carolyn Maloney, (H.R. 946, the Consumer Overdraft Protection Fair Practices Act), includes these provisions. Schumer says he’ll co-sponsor similar Senate legislation by Chris Dodd (D-Conn.), who chairs the Senate Banking Committee.