• Amend the Truth in Lending Act to require notification if a transaction at an ATM would trigger an overdraft fee and offer the chance to cancel the transaction before a fee is incurred;

• Require that overdraft fees relate to the ‘actual cost’ of processing the overdraft, as defined by bank regulators; and
• Stop the ‘re-ordering’ of transactions in a way that maximizes fees to the financial institution.

Two changes to the Senate version announced by Senator Christopher Dodd (D-CT) earlier this week have been included in H.R. 3904: it applies to traditional paper checks in addition to debit card transactions; and it would also apply to fees related to line-of-credit style overdraft plans.

“This approach to protecting consumers from egregious overdraft fees is one that should attract wide, bipartisan support. With Senator Dodd’s support for similar legislation on the Senate side, we ought to enable speedy passage through Congress and onto the President's desk by the Holidays,” Rep. Maloney said.

 “To be sure, some financial institutions have begun to take some steps to dial back the burden their overdraft policies have placed on consumers. But those steps have been small, and customers of all banks must be protected equally,” she continued. “I completely agree with what White House Economic Adviser Larry Summers said last Friday:

‘The time has come for fundamental change... both in how financial institutions conduct their business and how they are regulated.’ 

 “With the credit card reforms signed into law earlier this year, and with the overdraft reforms Senator Dodd and I have proposed this week, Congress has begun to address the first goal. With the derivatives legislation approved last week and the Consumer Finance Protection Agency legislation approved today by the Financial Services Committee, we’ve begun to address the second category,” she said.

Maloney has introduced overdraft reform bills in every Congress since 2005.

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For complete text of H.R. 3904, click here.

The main provisions:

• Amends the Truth in Lending Act to require notification if a transaction at an ATM would trigger an overdraft fee and offer the chance to cancel the transaction before a fee is incurred;
• Requires that consumers must opt-in in writing before they are enrolled in overdraft coverage programs on every type of transaction;
• Prohibits unfair or deceptive practices in connection with marketing or in the provision  of overdraft coverage;
• Prohibits banks from charging more than one overdraft per month and not more than 6 in a single year;
• Requires that overdraft fees relate to the ‘actual cost’ of processing the overdraft, as defined by bank regulators; and
• Stops the ‘re-ordering’ of transactions in a way that maximizes fees to the financial institution.
• Requires GAO to study the feasibility of providing notice about point-of-sale and restates the Fed’s existing authority to regulate on point-of-sale after the results are issued.