The American Bankers Association (ABA) and 52 other state banker associations have urged the Consumer Financial Protection Bureau (CFPB) to withdraw proposed changes to overdraft rules.
The CFPB’s proposal would apply requirements of Regulations Z to overdraft fees at bank and credit unions with more than $10 billion in assets.
The new rule would require banks to calculate and disclose an annual percentage rate on each overdraft fee, which could cut consumer overdraft fees by $3.5 billion each year.
According to the CFPB, the rule would close regulatory loopholes that will bring long overdue transparency and competition for overdraft lending.
However, the coalition has claimed the market for overdraft services is already transparent and competitive because banks have recently introduced sufficient changes to their overdraft programs.
For example, many banks now send low-balance alerts, link the customer’s checking account to another account, impose thresholds and caps on total fees and provide overdraft grace periods.
Read more in Banking Exchange