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Let regulators handle overdraft CUNA to Senators
WASHINGTON (11/18/09)--Credit Union National Association (CUNA) President/CEO Dan Mica has encouraged members of the Senate Banking Committee to suspend further consideration of S. 1799, the Fairness and Accountability in Receiving Overdraft Coverage Act of 2009 (FAIR Act), saying that he has “grave concerns” regarding the effect that the legislation “would have on credit union members who use and value the overdraft protection services their credit union provides.” The letter, which was submitted as written testimony in advance of Tuesday’s hearing on overdraft fees, added that “the provisions of S. 1799 that would limit the number of overdraft fees that could be charged per month and per year would simply end overdraft programs to the detriment of many consumers who truly value these programs.” The hearing included testimony from the Center for Responsible Lending's Eric Halperin and Pentagon FCU President/CEO Frank Pollack, among others. While CUNA “recognizes concerns exist about how some overdraft protection programs operate,” Mica, noting the recently released Federal Reserve rule that requires credit unions and other financial institutions to obtain consent from consumers before they could be charged overdraft fees for ATM and one-time debit transactions, said that taking a regulatory approach would be the most efficient means of tackling the issue. Though the requirements may present “significant compliance issues for some credit unions,” CUNA said that the Fed rule “significantly improves consumer protections with respect to these programs, by ensuring that consumers are made aware of the existence of these programs and requiring an opt-in in order to use overdraft protection programs with respect to ATM and one-time debit transactions.” Under S. 1799, credit union members would incur more non-sufficient fund fees, pay more merchant return check fees, and have more bad checks reported to consumer reporting agencies. Merchants would also be forced to deal with increased numbers of bounced checks, according to the letter. “Overlapping, duplicative and frequently changing regulatory and statutory mandates” would also have negative effects on credit unions, the letter added. “We hope the Fed action, as well as the fact that Congress is presently considering the creation of a consumer financial protection agency, will give Congress pause in pursuing the various legislative proposals pending before both chambers,” Mica wrote. To see the letter in full, use the resource link.
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