Rep. Maloney Introduces Overdraft Protection Act
Representative Carolyn Maloney (D-N.Y.), a senior member of the House Financial Services Committee, recently reintroduced her Overdraft Protection Act, which would restrict the number of times banks can collect overdraft fees and is intended to make sure the charges are reasonable. Maloney has introduced similar legislation in every Congress since 2009.
“Overdraft fees are predatory and hit hardest those who can least afford them—cash-strapped hardworking Americans and college students who are struggling to pay their bills, keep a roof over their heads, and food on the table,” Maloney said. “Making matters worse, even during the pandemic—when our country and the world was in the throes of both health and economic crises, banks charged billions of dollars in overdraft fees. The Consumer Financial Protection Bureau found that the average consumer pays a 17,000 percent interest rate by overdrafting their account. It’s not right for a $10 sandwich at a bodega to cost nearly $50 because of a $35 overdraft charge—the Overdraft Protection Act stops this.”
American Banker highlighted that the legislation’s reintroduction is the latest example of pressure that has been placed on banks since the COVID-19 pandemic to readjust or get rid of overdraft fees. Banks have reaped millions of dollars in overdraft fees, and some have even charged them multiple times a day. The legislation would limit the number of fees banks can charge to once per month and six per year.