Fed Overdraft Rule Inadequate, Congress Must Act

WASHINGTON, Nov. 12 /PRNewswire-USNewswire/ -- Statement of Eric Halperin,
director of the Washington D.C. office of the Center for Responsible Lending:

"The Federal Reserve Board's action today on debit card overdraft fees
legitimizes an abusive product without providing any substantive protections
for bank customers. We appreciate that the Fed chose to implement the
strongest overdraft reform rule it was considering, namely requiring banks and
credit unions to ask new and existing customers before charging overdraft fees
on debit card transactions. But this improvement is undermined by the Fed's
failure to propose or enact necessary safeguards against a host of unfair
practices.

The Fed acknowledges in its new rule that the fees charged for debit card
overdrafts can 'substantially exceed' the cost of the overdraft itself. Yet,
the rule does not prohibit institutions from charging an unlimited number of
overdraft fees in a single day, even if the transactions are for small
amounts, which most are. In fact, the typical debit overdraft is for $17. The
typical fee a bank charges to cover that overdraft is $34.

Congress needs to step in to stop the abusive practices the Fed has known
about for nearly a decade, but once again has failed to address. Bills in the
House and Senate, introduced in recent weeks by Rep. Carolyn Maloney and Sen.
Christopher Dodd, would limit overdrafts to no more than one a month and six a
year. The legislation also would require that fees be reasonable and reflect
an institution's cost of covering an overdraft."

About the Center for Responsible Lending
The Center for Responsible Lending is a nonprofit, nonpartisan research and
policy organization dedicated to protecting homeownership and family wealth by
working to eliminate abusive financial practices. CRL is affiliated with
Self-Help, one of the nation's largest community development financial
institutions.

SOURCE Center for Responsible Lending

Kathleen Day, +1-202-349-1871, kathleen.day@responsiblelending.org; Ginna
Green, +1-510-379-5513, ginna.green@responsiblelending.org; or Charlene
Crowell, +1-919-313-8531, charlene.crowell@responsiblelending.org, all of the
Center for Responsible Lending