Representatives introduced a bill in July that would make a number of overdraft reforms, including enhancing marketing materials so consumers clearly know when they are opting in to overdraft protection; banning fees for declined charges; requiring that overdraft fees be reasonable compared with the overdraft itself; limiting the number of fees a bank can charge to six per calendar year; and warning consumers who are taking money out of an ATM if a transaction will trigger an overdraft.
The bill would also force banks to post transactions in order from highest to lowest. Some banks have drawn scorn for reordering transactions to increase the odds that it will trigger multiple overdraft fees.
Recognizing that Republicans, who are in the majority, are unlikely to take up the legislation, they are hoping Cordray could address the issue without Congress.
“Overdraft fees hit the consumers who can afford them the least — cash-strapped hardworking Americans who are struggling to pay their bills,” Rep. Carolyn Maloney (D-NY) said. “This is why I am not only working to pass my Overdraft Protection Act but am also calling on CFPB Director Cordray to act on this before his term ends.”
The CFPB is already working on an overdraft rule and can move forward without congressional approval. Republicans would still have an opportunity to reject the rule with a simple majority using the Congressional Review Act, but such a maneuver would require significant political support.
“This legislation is badly needed to curb banks’ rampant abuse of overdraft fees,” Brian Simmonds, policy counsel with the Americans for Financial Reform, said.