The Center for Responsible Lending, along with Consumer Action, Consumer Federation of America, Consumers Union, National Association of Consumer Advocates, National Consumer Law Center (on behalf of its low-income clients), and U.S. PIRG provide the following comments regarding the Federal Reserve Board’s proposed rule to amend Regulation E pursuant to the Electronic Funds Transfer Act.

On March 12, 2009, Representative Carolyn Maloney, Chairwoman of the Financial Institutions Subcommittee (D-NY), and Representatives Ackerman, Miller of North Carolina, Ellison, Speier, Tierney, and Eshoo introduced legislation to protect consumers from abusive overdraft loan programs and stop financial institutions from deliberately manipulating their systems to generate more overdrafts—while preserving the institutions' ability to cover occasional overdrafts as a courtesy without triggering the Act's requirements. The Act would: Amend the Truth in Lending Act to clarify that overdraft fees are finance charges, so that annual interest rates are reported. Consumers would then be able to compare the cost of overdraft loans with the cost of other credit options. Require written consent before enrollment in the overdraft loan program. Require financial institutions to warn the customer when an ATM withdrawal will trigger a fee—and allow the customer to cancel the transaction at that time. Prohibit financial institutions from manipulating the order of check clearing to increase customers' overdraft loan fees.

Overdraft comment letter

America, Consumers Union, and the National Consumer Law Center, provide the following comments regarding the Federal Reserve Board’s proposed rule to amend Regulation DD pursuant to the Truth in Savings Act (TISA).

CRL discusses importance of requiring banks to get explicit permission from customers before enrolling them in high-cost overdraft.

CRL's amicus briefs in support of the plaintiff class in Miller v. Bank of America. CRL argues that California law concerning banks' set-off powers forbid banks from deducting overdraft fees from public benefit payments, including Social Security benefits, and this law is not preempted by the National Bank Act or regulations issued by the Office of Comptroller of the Currency. The trial court entered a verdict in favor of the plaintiff class; CRL participated in this case before the California Court of Appeals, First Appellate Division, and the California Supreme Court.

Testimony of Eric Halperin Before the U.S. House Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit.

CRL endorses Rep. Maloney's HR 946 as effective reform of bank overdraft practices.

CRL's amicus briefs in support of the plaintiff class in Miller v. Bank of America. CRL argues that California law concerning banks' set-off powers forbid banks from deducting overdraft fees from public benefit payments, including Social Security benefits, and this law is not preempted by the National Bank Act or regulations issued by the Office of Comptroller of the Currency. The trial court entered a verdict in favor of the plaintiff class; CRL participated in this case before the California Court of Appeals, First Appellate Division, and the California Supreme Court.

Proposed FDIC Survey of Overdraft Loan Programs