WASHINGTON (4/17/12)--Overdraft protection is an extremely important topic for credit unions, which offer a variety of related programs, and the Credit Union National Association (CUNA) has asked the Consumer Financial Protection Bureau (CFPB) to extend a comment period for its overdraft fee initiative, which is scheduled to end on April 30.
In a communication to Dan Sokolov, CFPB deputy associate director for research, markets and regulations, CUNA requested an additional 30 to 45 days to develop comments on the issue. "We want to make sure the agency has the information it needs," CUNA Deputy General Counsel Mary Mitchell Dunn told Sokolov.
The CFPB earlier this year announced a new overdraft fee initiative, under which the bureau distributed questionnaires to large banks in an effort to evaluate how those institutions' overdraft policies affect consumers.
The CFPB has said it is particularly focused on the practice of re-ordering purchases and payments to maximize overdraft fee charges, on whether consumers can anticipate and avoid overdraft fees, and on how differences in the way institutions explain and promote overdraft programs may affect opt-in rates.
The CFPB has said it plans to use overdraft comments from consumers, the financial services industry, and other interested parties to craft new overdraft fee disclosures and rules, assist with policymaking on overdraft practices, and to prioritize the bureau's regulatory and education work. (See related Feb. 23 News Now story: CUs represented in CFPB overdraft discussion.)
The CFPB is also considering requiring a so-called "penalty- fee box" – which would add information on the amount overdrawn and total overdraft fees charged each month to a consumers monthly checking account statement. The bureau also is developing a consumer overdraft fee education project.
Robert Allen, president/CEO of Long Island, N.Y.'s Teachers FCU, and CUNA Regulatory Counsel Jared Ihrig were among those that met with the CFPB earlier this year to discuss the overdraft fee project and other issues with CFPB staff.
Allen told the CFPB that credit unions support meaningful overdraft fee disclosures, but added that the CFPB needs to consider the costs that credit unions and other institutions would bear as it addresses overdraft fee issues. He noted that credit unions routinely charge lower overdraft fees than those charged by banks, and said his credit union refunds many account fees and makes financial counseling available to members.