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 Frank Pollack, president of the nation’s third largest credit union, which offers members a line of credit–but no fee–on overdrafts, but only after the member has consented, or opted in. 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.”
The head of the $14 billion credit union will tell senators of the expansion of a program giving military or retired military members of Pentagon FCU two free non-sufficient funds transactions every 90 days to all members of the credit union. This would make an estimated 98% of all overdrafts free for members, he told The Credit Union Journal yesterday.
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 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.
Scheduled to testify along side Pentagon’s Pollack are representatives of the Consumer Federation of America and the credit union-backed Center for Responsible Lending, an affiliate of Self-Help CU, which both support the proposed legislation.
