New House Bill Tackles Overdraft Fees

http://washingtonindependent.com/64868/new-house-bill-tackles-overdraft-fees

New House Bill Tackles Overdraft Fees
By Mike Lillis 10/22/09 4:27 PM


On Monday, it was Sen. Chris Dodd (D-Conn.) unveiling legislation to rein in overdraft fees. Today it’s Reps. Carolyn Maloney (D-N.Y.) and Barney Frank (D-Mass.) doing the same.

Both bills would require banks to get customer consent before enrolling them in the overdraft protection program; both would cap the number of overdraft fees at six per year; both would require banks to notify customers beforehand when a purchase or ATM withdrawal is set to trigger an overdraft fee; and both would prohibit banks from re-ordering transactions for the purpose of maximizing the number of fees.

One significant distinction between the chambers’ bills: the House proposal would also apply to written checks that overdraw an account, not just debit purchases that exceed balances.

There’s a lot at stake here — both for consumers and the banking industry — as overdraft fees have evolved into an enormous money-maker for the banks. This year alone, the banks are expected to reap more than $38 billion in overdraft charges, according to Moebs Services, an Illinois-based financial research firm.

Translation: Don’t expect the industry to take this one sitting down.