Compliance

10:19 AM
Bryan Yurcan
Bryan Yurcan
Commentary
Connect Directly
Facebook
Twitter
Google+
RSS
E-Mail
50%
50%

Cordray: Overdraft Fees Similar to Payday Loans

The head of the Consumer Financial Protection Bureau said the agency will scrutinize the practice.

Cordray also said the agency will look into whether banks should be required to process transactions chronologically. Many banks process them by dollar amount from highest to lowest, which Cordray said allows for the imposition of multiple overdraft fees per day. Banks have argued that doing this ensures that consumers' most important transactions, such as mortgage or credit card payments, get processed first.

The CFPB said it will begin the inquiry process by seeking feedback from bank customers, consumer groups and banks themselves. Cordray said the agency will also exhaustively examine data while forming its inquiry. "We are committed to being a data-driven agency," he said.

Cordray said the study could result in additional regulatory rules, and possibly lawsuits.

When the roundtable participants were allowed to speak, the tenor was fairly predictable. The representatives from consumer groups cast banks as villains, freely using words such as "gouging" and "misleading" to describe their methods. Representatives from the banks, which included Bank of America, Citi, Amalgamated Bank and Teachers Federal Credit Union, attempted to explain how they are trying to mitigate overdraft fees and better educate consumers.

Ultimately, it is an interesting issue with valid points on both sides. What do you think? Does this CFPB inquiry seem like a step in the right direction, or just a pointless government excercise?

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

Previous
2 of 2
Next
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
bmoore312
50%
50%
bmoore312,
User Rank: Apprentice
2/23/2012 | 7:07:58 PM
re: Cordray: Overdraft Fees Similar to Payday Loans
I believe current laws already limit OD fees to 5 or less per day.-á This makes the CFPB/Cordray look like idiots.-á And OD fees are NOT the same as payday loans.-á OD fees are the result of an account holders carelessness and irresponsibility.-á Where is the consumer responsibility in all this brewhaha??-á Why isn't someone investigating why consumers overdraw their acounts and then want someone to bail them out of their stupidity?-á
Maybe the ultimate answer is to go completely electronic.-á Send everything (checks, too) as electronic, immediate-impact transactions.-á If a consumer does not have the money in their account, the-átransaction is canceled immediately.-á No sale but no OD fees applied - end of issue.
shickerson625
50%
50%
shickerson625,
User Rank: Apprentice
2/23/2012 | 6:01:54 PM
re: Cordray: Overdraft Fees Similar to Payday Loans
Pointless Government Exercise -- just like the entire agency.-á Why is it that these politcally grandstanding congressmen and agency heads never stop and think about the nature of this fee?-á It is a totally voluntary fee.-á If the consumer doesn't want to pay this fee, don't write a check when you don't have the money in your account to cover it.-á It is that simple, but according to these government officials, the banks are just supposed to allow these people to write themselves what amounts to-áinterest free loans any time they are running a little short.-á

What a deal.-á As long as I have a checking account, I will never have to finance anything again.-á The people in Washington need to get over this-ástroking people for votes at the expense of the banks, and make people take responsibility-áfor their own actions.-á -á
Register for Bank Systems & Technology Newsletters
White Papers
Current Issue
Bank Systems & Technology - August 2014
Modern core systems are emerging as the foundations of effective channel integration and customer engagement initiatives.
Slideshows
Video