U.S. PIRG Consumer Blog: Banks oppose reform of unfair bounced overdraft fees, your calls needed

If you've ever paid a $35 debit overdraft fee for a $4 latte and would have preferred that your bank reject the transaction, it's time to call Congress. If you didn't know that without your permission your bank signed you up for fee-laden "courtesy" overdraft instead of asking you whether you wanted the much better deal of an overdraft line of credit, it's time to call Congress. Put down the coffee and pick up the phone. Call 202-224-3121, that's the switchboard, and ask your Representative to support Rep. Carolyn Maloney's HR 3904, The Overdraft Protection Act of 2009. Then, call back and ask your two Senators to support the Senate version, S. 1799, the FAIR Overdraft bill from Sen. Chris Dodd (D-CT). Ask your friends to do the same. Here's why.

Despite an overwhelming slam-dunk policy victory by outnumbered consumer witnesses at yesterday's House hearing on reform of overdraft "protection" schemes that could earn banks and some credit unions up to $38 billion this year, passage of Rep. Carolyn Maloney's (D-NY) tough reform legislation is not guaranteed. Big banks, small banks (and those credit unions that have lost their way and no longer place their members first), backed by their well-heeled cadres of in-house, association and outside hired-gun lobbyists and consultants, have mounted a last-ditch assault to defeat the widely-supported HR 3904, The Overdraft Protection Act of 2009. While the Associated Press reported that the phalanx of bank and other pro-fee witnesses all claimed that "customers want the protection," the LA Times reported:

By the way, Brady Dennis reports on the power of the small bank lobby in today's Washington Post. They've been effective at carving out exceptions, but are no angels. Overdraft protection schemes were first used by community banks, then spread to the big banks.

Coda: Not all credit unions disappoint me. A few remember that credit unions are member-owned, member-driven alternatives to banks. Joining three consumer advocates yesterday was Jim Blaine, CEO of State Employees’ Credit Union of North Carolina, a credit union that is trying to show others the way:

Thank you for the opportunity to testify today in support of H.R. 3904, The Overdraft Protection Act of 2009. Our view of overdraft protection as currently offered to most consumers is that enough is enough – it is past time for a switch to fairness.

And of course, the consumer group Center for Responsible Lending (that's CRL's Eric Halperin pictured in that LA Times photo of the hearing, next to bank lobbyist Nessa Feddis) was founded by the NC-based Self-Help credit union.