WASHINGTON-The CEO of another giant credit union will testify next week before the Senate Banking Committee in favor of proposed legislation that would rein in overdraft protection programs and require credit unions to obtain written permission from members-an opt-in-to overdraft programs.
"We believe that opt-in should be mandatory," said Pentagon FCU CEO Frank Pollack. The nation's third largest CU offers members a line of credit-but no fee-on overdrafts, but only after the member has or opted into the program. The line of credit brings a 14.65% annual percentage rate and can be paid off the next day. "Our big thing," said Pollack, "is it has to be opt-in. Any consumer should have the right to know what they're buying into." Pollack will tell senators of the expansion of a program giving two free non-sufficient funds transactions every 90 days to all members, making about 98% of all overdrafts free for members. The Pentagon FCU executive's appearance comes two weeks after Jim Blaine, the president of the nation's second largest credit union, North Carolina State Employees' CU, testified before the House Financial Services Committee in favor of opt-in on overdraft programs. The separate congressional appearances by the two credit union executives comes as the organized credit union lobby, CUNA and NAFCU, are opposing current overdraft legislation that would require opt-in, limit the number and amount of fees one member could be charged and bring overdraft protection programs under the disclosure requirements of the Truth in Lending Act.
