Banks' retreat on overdraft fees won't stave off legislation (Frank & Dodd persuing restrictions)

[Statistical]

The bank industry's signs of retreat on account fees may not satisfy Washington lawmakers, some of whom say they're pushing ahead with broad restrictions on fee policies at banks. Bank of America Corp. and JPMorgan Chase & Co. , the two largest U.S. by assets, said this week they are reducing overdraft fees. Some regional banks, including Toronto-Dominion Bank , PNC Financial Services Group Inc. and Fifth Third Bancorp , are also planning to change some of the ways they charge fees.

House Financial Services Committee Chairman Barney Frank (D-Mass.) said in an interview that he supports the moves by Bank of America and JPMorgan Chase. But Frank said he will still push forward with legislation requiring changes in overdraft policies at banks. The Federal Reserve is also considering strict curbs on overdraft fees that could be finalized later this year. The policy change by the two giant banks "confirms that it's doable," Frank said. "No one else will be able to argue that it's too burdensome." A spokeswoman from Senate Banking Committee Chairman Christopher Dodd's office (D-Conn.) said the senator is still moving forward with legislation.

Rolling back fees poses a high-stakes dilemma for banks. The industry earned $39.5 billion from service charges on deposits last year, according to data from the Federal Deposit Insurance Corp. Fees for everything from ATM usage to balance transfers accounted for about 25% of the industry's total revenue, and are welcome as banks wrestle with losses from the the nationwide housing depression and severe U.S. recession. "A couple of financial institutions taking voluntary steps," said Eric Halperin, director of the Center for Responsible Lending, "doesn't end the need for legislation."

http://www.marketwatch.com/story/banks-retreat-on-overdraft-fees-wont-stave-off-legislation-2009-09-24

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Sorry banks you just proved that there should be no problem legislating massive restrictions on overdraft "protection". More like profit protection is you ask me.

[Statistical]

1. I am suprised so little interest despite people hating overdraft fees.

My goal is that Frank bill will have the following elements

a) owners can opt-out of OP on all current accounts
b) all new accounts are opt-in only
c) caps on max overdraft fee & number of overdraft fee in single day ($25 and max of 3)
d) required "grace" for overdrafts less than certain amount ($5? $10?)
e) all transactions for single day need to be processed as following, all deposits first, then all charges smallest to largest

I wrote to Frank letting him know that would be comprehensive reform in my book. Any reform that doesn't address that all these points will allow the Banks to slightly change policies and continue with excessive fees.

[napi21]

2. I worked for 3 diff. banks over the years, and it was MANDATORY

that they always prodess all deposits BEFORE processing withdrawls! I know that was years ago, but I'm surprised they dont still do that.

[Statistical]

4. Sadly now not only do they not process deposits first...

they re-order the charges at the end of the day largest to smallest. They say the consumer wants it that way.

Say you have $180 and 4 charges today in this order.

$50
$20
$30
$200 - overdraft

Now if processed in order you would have one overdraft.

Reordered largest to smallest.
$200 - overdraft
$50 - overdraft
$30 - overdraft
$20 - overdraft

Don't worry though BofA caps overdrafts at a max of 6 per day @ $35 each. So the most this "convenience" can cost you is $210 per day.

[blueamy66]

5. Isn't this part of the new policy?

Aren't these 2 banks now going to process debits as they occur, instead of largest to smallest as they clear from "pending"?

I've had it out with a few BofA employees over their "the customer wants the highest to clear first" policy. It's utter bullshit. If BofA is going to PAY THEM ALL, why do I care which they pay first? Come on, BofA, we are not stupid.

[Statistical]

6. I think these 2 banks agreed to change however...

it needs to be standardized and uniform.

[Skink]

3. Caps are the right thing.

I now have it linked to savings in a new account rather than a credit card. Though I haven't had to use it I see that there is a large fee imposed if used. Conversly I have an automatic deduction taken from checking each month and that costs me nothing and I can also transfer funds for free.

[TxRider]

7. It's about time

I just hope it isn't a hollow bill.