Overdraft Open Season

New York Times
February 23, 2010
Martin, Andrew; Lieber, Ron
P. B1

Federal Reserve rules requiring banks to receive customers' permission before enrolling them in overdraft protection programs take effect this summer, and banks have already launched marketing campaigns to persuade customers to opt in. Economist Michael Moebs says banks pocketed about $20 billion in overdraft fees on debit purchases and ATM transactions last year. To preserve this fee income, many marketing materials from banks target account holders who repeatedly incur these fees. Given that the new Fed rules do not limit how much banks can charge in overdraft fees or how many fees they can impose, they have a "tremendous incentive to get as many consumers to opt in as possible," says Center for Responsible Lending policy counsel Rebecca Borne. Although Bank of America and Chase are among the banks to voluntarily eliminate fees on small overdrafts and restrict the number of overdraft fees charged in a single day, legislation has been introduced in Congress to implement severe limitations of one overdraft fee per month and six per year. However, aggressive lobbying and other financial reform bills have prevented Congress from taking action.
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