Banking regulators, including the Consumer Financial Protection Bureau, should refrain from adding new requirements on overdraft protection programs beyond the new rules issued last year by the Federal Reserve, according to the American Bankers Association.
Wayne Abernathy, ABA’s executive vice president for financial institutions policy, recently sent a letter to the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation and the CFPB stating that last year’s rule regulating overdraft programs is “a strong, simple standard” that empowers consumers to make voluntary choices about coverage and informs them about options and fees.
Abernathy wrote that the agencies are proposing additional rules for overdraft programs without studying the Fed’s rule impact. Instead of sticking to one clear rule that can be applied to all overdraft protection programs, Abernathy wrote that banks will struggle to comply with four different regulatory standards.
“[W]e urge a reassertion of the interagency mission of the [Federal Financial Institutions Examination Council] banking agencies, including the new [CFPB], to apply a uniform set of supervisory expectations to
the enforcement of this and other consumer regulatory standards,” Abernathy wrote, according to the ABA.
Many Congressional members considered the Fed’s rule a major victory for consumers last year.
"Overdraft protection programs should be a choice for consumers, not a way to penalize them without their knowledge,” Sen. Sherrod Brown (D-Ohio) said. “Taxpayers helped stabilize the financial services industry – big banks should not return the favor by slamming consumers with billions of dollars in overdraft fees. This rule puts consumers first and allows them to make informed decisions about their accounts."