Fed Proposes Rules Regarding Overdraft Fees
The Federal Reserve Board also announced today that it is separately proposing rules to protect consumers that use overdraft services offered by their bank. The rule solicits public comment on proposed amendments to Regulation E (Electronic Fund Transfers) intended to provide consumers a choice regarding their institution's payment of overdrafts for automated teller machine withdrawals and one-time debit card transactions. The Board is proposing two alternative approaches to providing consumer choice, including a proposed requirement that would require institutions to obtain consumers' affirmative consent (or opt-in) before any overdraft fees or charges may be imposed on consumers' accounts. The comment period for the Regulation E proposal ends 60 days after publication in the Federal Register.
In a related move, the Board is adopting final amendments to Regulation DD (Truth in Savings) to address depository institutions' disclosure practices related to overdraft services. The effective date for the final rules adopted under Regulation DD is January 1, 2010.
It will be virtually impossible for the Fed to redraft rules which will protect consumers from abusive bank overdraft policies until it applies Reg. Z (Truth in Lending) to these short-term credit extensions, instead of Reg. DD which has nothing to do with credit. Continuing to allow banks to escape the disclosure requirements of this short-term credit product by applying a regulation designed for savings products is an abuse of the Fed's authority and places consumers at a distinct disadvantage in dealing with banks and making educated choices amongst various credit products. At the same time, it provides banks with an incentive to continue employing anti-consumer practices such as high-to-low check clearing and manipulating the application of credits and debits to accounts which maximize these penalty fees. Lastly, deliberately mis-applying
a regulation designed for savings products to a credit product would appear to call into question the Fed's commitment to the concepts of financial transparency and financial literacy.
Posted by: Jim Wells | December 20, 2008 at 06:17 PM
Heres a typical HSBC example of banking protocol. On Friday, December 19 at 13:00, I made a depost for $350. The deposit receipt said the money wouldn't be applied until the next business day?!! They didn't post it to my account until the following tuesday. I desperately needed money for groceries and other necessities. They charged me $35 dollars 9 times. It was as if that HSBC branch needed money as well, and I was their last source. They designed a profitable scheme based on the fact that I had $10 in the bank. They don't even post my ARMY paychecks on payday? They did in november and before. Where do they get the nerve! I don't see how this bank can live much longer if their main cash cows are people like me, a hard working average guy just trying to get by.
Posted by: colin | January 16, 2009 at 08:50 AM