By: Joe Gillen
After years of lobbying to place additional restrictions on overdraft privilege programs, New York Representative Carolyn Maloney introduced a bill that would impose strict limits on banks' overdraft collection and disclosure procedures. But how likely is it that the bill will pass? Not likely.
The partisan bill, sponsored primarily by Democrats, is expected to face obstacles in the Republican-controlled House, NAFCU legislative affairs vice president Brad Thaler told the Credit Union Times. Maloney's insistence on more overbearing overdraft regulations has been a personal ambition for several years, but one that has failed to garner popular support, which creates another barrier for passage.
The bill includes provisions that are redundant to existing Regulation E requirements, such as the requirement that consumers opt-in to overdraft. Further, banks and credit unions are already required to disclose fee schedules to consumers, rendering Maloney's additional disclosure stipulation - which would require consumers to examine fees before initial enrollment and after using services - overly burdensome.
The American Bankers Association has also been vocal about the burden these regulations would place on consumers, most of whom support overdraft privilege programs and are equipped to make informed decisions about their finances.
"Overdraft protection is a service customers freely elect to have and they value their payments being covered," ABA spokesman Jeff Sigmund said in a statement. "They know the fee in advance and can opt out of overdraft protection at any time."
Although Maloney is expected to lobby hard for the new bill, waning support will likely kill the legislation in the House. According to Thaler, the bill has "just about zero chance of being passed," he told the CU Times.