|
 The Consumer Financial Protection Bureau has sounded the alarm on
overdraft fees, saying they take advantage of often low-income
people and could lead to account closures.
Republicans on the committee that oversees financial services
disagree, and Texas Representative Randy Neugebauer plans to
introduce a bill later this week to replace the agency's director
with a five-person commission appointed by the president.
Overdraft fees on checking accounts average $34, and are mostly
incurred on transactions of $24 or less, according to the agency. In
the end, consumers pay the equivalent of more than 17,000 percent in
annual interest rate for a loan.
A 2010 rule prohibits banks from charging overdraft fees on ATM
withdrawals or debit card transactions unless a customer opts for
it.
 The agency is currently mulling options to further regulate
overdraft charges on bank accounts and prepaid cards, but faces
pushback from the financial industry and Republicans, who say the
agency is overstepping its authority.
"Sometimes, I think you are trying to do good, but in the end, what
you do creates harm to an industry where people are using products
that they actually know what they're getting into," Representative
Sean Duffy, a Wisconsin Republican said at a House Financial
Services Committee hearing on the agency's semi-annual report to
Congress on Tuesday.
But Democrats like Maxine Waters of California and David Scott of
Georgia, want the Consumer Financial Protection Bureau to regulate
overdrafts with Waters calling for a total ban.
Republicans have long been critical of the consumer watchdog created
by the 2010 Dodd-Frank law, saying it lacks accountability.
[to top of second column] |
The agency in November proposed rules to treat overdraft fees on
prepaid cards as a form of credit and give consumers a period of
time to repay.
"Our thinking is that when you have credit on a prepaid card, that
this could be treated similar to the way it's treated under the
credit card rules and the card act," agency Director Richard Cordray
told lawmakers at the hearing.
Other Republicans, including Jeb Hensarling of Texas and Lynn
Westmoreland of Georgia, said their constituents want the right to
use overdraft options, especially in emergencies.
"True consumer protection empowers consumers and respects their
economic freedoms to make important informed choices with freedom
from government interference," Hensarling said.
(Editing by Lisa Shumaker)
[© 2015 Thomson Reuters. All rights
reserved.]
Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
