Sun editorial:

Going after greedy banks

Legislation would give consumers more protection against costly overdraft fees

Friday, Oct. 23, 2009 | 2:08 a.m.

There are plenty of reasons to distrust the banking industry these days, given the role it played in the collapse of the U.S. economy. While the industry’s Wall Street shenanigans have grabbed the headlines, though, its propensity toward gouging consumers by charging outrageous overdraft fees has slipped mostly under the radar.

That’s about to change, thanks to much-needed legislation that was introduced Monday by Senate Banking Committee Chairman Christopher Dodd, D-Conn., and co-sponsored by Senate Majority Leader Harry Reid, D-Nev.

The Fairness and Accountability in Receiving Overdraft Coverage Act would require banks to obtain customers’ permission before placing them in overdraft protection programs for ATM and debit card transactions. Banks would also have to warn consumers when they have overdrawn their accounts, giving those customers the opportunity to cancel transactions before being slapped with penalties.

The legislation also would limit banks to one overdraft fee per month and six per year for each customer.

Reid, who said this legislation would restore fairness and accountability, was on target when he also said: “If you are one of the many people suffering from the effects of this economy, something as simple as a $50 overdraft fee can really hurt.”

Banks rake in $17.5 billion annually in overdraft fees, according to the Center for Responsible Lending, a nonprofit consumer advocacy group in Durham, N.C. That’s money that consumers could use to buy food or medicine or keep the lights on in their homes.

It would not be surprising to see banks put up a stiff fight against this legislation, as they have with other proposed reforms designed to avoid future economic failures. But consumers should band together and insist that banks dismantle overdraft rip-off schemes that have resulted in insurmountable debt for many people.

We would encourage Congress to take swift action to approve this legislation before more consumers fall into the cycles of debt that mounting overdraft fees help create.

Discussion: 3 comments so far…

By SgtRock

10/23/09 at 6:23 a.m.

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This is stupid.

Overdraft is a privilege that financial companies give to its customers. It is not a right.

The customers can avoid overdrafts by ....can you guess...not over drafting their accounts.

We can go back to the old days. When financial companies did not extend this benefit to its customers.

And then when customers over draft they could be arrested by the law for writing a check that does not have funds to pay it is against the law.

Over draft fees, late fees and over limit fees are fees generally only the dumb pay.

It is taking money from the dumb and giving it to the smart.

It is just like state lotteries and gambling and strip joints and prostitution and drug operations.

It is just taking money from the dumb and giving it to the smart.

I am OK with it for I would rather have smart people spend the money than the dumb.
By lemahj

10/23/09 at 12:41 p.m.

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What we need to get Congress out of the legitimate affairs of Business. Congress has been the root problem, in my opinion, of nearly every economic mess this country has gotten into. The Keynesian Economic model appears to have been invented out of thin air as nothing more than an excuse for Government to mettle in the affairs of everyone's life. If this country is to survive, the role of Government must be redefined such that government no longer allowed running the entire country like a mob protection racket and we must end Congresses role of Social Engineering our society to some un-workable utopian form, which forces a god-less Humanism religion down the throat of every citizen.
By Phargo

10/23/09 at 11:37 p.m.

Suggest removal

Bankers, Insurance Executives,and Politicians all have aberrant sexual appetites.