NAFCU shares concerns on heightened overdraft scrutiny ahead of HFSC hearing
NAFCU Vice President of Legislative Affairs Brad Thaler wrote to the House Financial Services Subcommittee on Consumer Protection and Financial Institutions ahead of its hearing today to examine overdraft fees. Thaler shared the association’s support for a fair, transparent, and competitive market for consumer financial services but cautioned that increased scrutiny or legislative efforts to eliminate overdraft protection programs are likely to result in significant negative impacts on borrowers and credit unions.
“The overdraft rules, originally issued by the Federal Reserve and now under the purview of the Consumer Financial Protection Bureau, made these programs something that consumers must opt in to in order to receive the service,” wrote Thaler, pointing out the evolution of overdraft protection programs and rise in credit union member requests for participation. “This opt-in requirement gives consumers control and the overdraft rule’s notice requirements have helped consumers to better understand the cost of overdraft programs.”
In the letter, Thaler noted how former Committee Chairman Barney Frank, D-Mass., previously recognized the importance of an opt-in system and how consumer choice should supersede legislation around overdraft programs stating at a 2009 hearing, “We wouldn’t, I believe, be in a situation where we are talking about legislation if you would have had an opt-in regime from the beginning.”
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