Blog: CBA urges House Financial Services not to advance overdraft bill – Financial Regulation News – Financial Regulation News

The Consumer Bankers Association (CBA) voiced its opposition to a bill that addresses bank overdraft services and fees for customers.

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In a new letter sent to the House Committee on Financial Services, CBA President and CEO Richard Hunt said Americans rely on bank products like overdrafts to cover emergency expenses. The Overdraft Protection Act of 2021 (HR 4277) seeks to prohibit a financial institution from engaging in unfair or deceptive acts in connection with overdraft coverage.

“Without access to viable, bank-offered short-term liquidity products like overdraft, consumers will be left with little recourse but to use less-supervised, less-regulated, non-depository institutions to meet their needs – an undesirable position to place vulnerable consumers,” Hunt wrote to the members of the committee.

He highlighted recent overdraft innovations designed to expand choice, strengthen transparency, and reduce consumer costs. These innovations include real-time payment updates, race periods, posting alerts, and no-fee overdrafts.

“These bank-led innovations, in conjunction with existing clear disclosures, will add continued benefit to consumers who depend on overdraft services to cover short-term gaps in finances by continuing to provide a viable service that will come at minimal or no cost. Bank regulators agree further restrictions to short-term liquidity options, such as overdraft services, would drive many families to more expensive options outside the highly regulated banking industry,” Hunt wrote.

Hunt urged the committee to reject this bill as proposed.

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