WASHINGTON – Credit unions, under fire from a number of directions, were dodging a new bill yesterday that would require them to get members express approval–opt-in–for overdraft protection, and would set new limits on overdraft charges.
The bill, co-authored by Senate Banking Committee Chairman Christopher Dodd of Connecticut, would require members to opt-in and would bar credit unions and banks from discriminating against any customer that chooses to opt-out.
Credit unions would also be limited to charging only one overdraft fee a month, and no more than six a year, and would be limited to assessing fees that are “proportional to the cost of processing an overdraft.”
Banks should not be trying to bolster their profits at the expense of their customers, Dodd said in a statement.
The proposal comes as the Federal Reserve is expected to issue new regulations that also require opt-in for overdraft protection.
The legislation is the latest of efforts by Congress to reign in what they consider predatory practices by banks in mortgages, credit cards and other financial services, which have caught credit unions in their regulatory web.
