Out of Control Policy Blog

Senate to Attack Overdraft Fees

Senate Banking Committee Chairman Chris Dodd (D-CT) is planning to propose a new bill that would limit bank abilities to charge overdraft fees:

Banks could not charge overdraft fees on cash-machine and debit-card transactions unless customers have opted in to an overdraft protection program, under a bill introduced in the U.S. Senate Monday.
Adding to Congress' fast-growing list of proposed new rules for banks, Democratic Senator Christopher Dodd offered the overdraft bill, with three other senior lawmakers, targeting controversial fees some banks are already backing away from.

"Consumers are being hit with hundreds of dollars in penalties for overdrawing on their account by just a few dollars. Banks should not be trying to bolster their profits at the expense of their customers," said Dodd in a statement.

Uh, actually Senator, that's exactly what banks should do. Banks are in business to make profit. Individuals are customers. Customers can pick and choose where they put their money. Why are we acting like we have some kind of a right to banking?

Furthermore, why is personal responsibility not the concern here? If you overdraft your account, whose fault is that? Why get mad at the bank for your own mismanaged finances?

What I would like to ask Sen. Dodd is this: if your bill passes, do you think this will encourage Americans to be smarter with their finances or less responsible? The way I see it, if I can withdraw an extra $100 that I don't have from my bank account why not do it? ATMs become pay-day loan machines. Think there won't be any problems with abuse? Right.

Anthony Randazzo is Director of Economic Research

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Comments to "Senate to Attack Overdraft Fees":

John Thacker | October 19, 2009, 6:16pm | #

I strongly suspect that the result would not be a payday loan (which is more what overdraft fees themselves are), but instead would simply refuse withdrawals for insufficient funds. Of course to someone who needs money in an emergency after hours but didn't opt-in to a program and the bank's closed until Monday, that might not be the best answer.

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