WASHINGTON - Lawmakers are expected to propose an amendment to pending legislation to rein in abuses in overdraft protection which would enable credit unions to continue to offer the popular programs.
The proposal would require credit unions and banks to calculate annual percentage rates for such programs, commonly known as bounce protection, under the Truth In Savings Act, instead of the Truth In Lending Act, one NAFCU lobbyist working on the bill told Credit Union Journal.
Credit union representatives worry that if the programs are brought under the lending laws, then fees charged would be calculated along with interest, and bounce protection offered by credit unions likely would exceed NCUA's 18% annual interest rate ceiling for all credit unions.
This would prevent credit unions from offering the popular program, currently offered by more than 2,000 credit unions.
In addition, instead of requiring credit unions and banks to obtain consumers' explicit approval for bounce protection, the amendment would allow consumers to "opt-out," of the programs. The bill is expected to be formally voted by the House Financial Services Committee over the next few weeks.
