The influence consumer advocates have on public policy these days is striking. Intense lobbying from watchdog groups is a big reason why banks must now adhere to strict new rules governing credit card marketing practices and overdraft programs, and why many of them will soon have to answer to a new consumer protection regulator housed within the Federal Reserve.

Yet while the mission to lower the cost of financial services for low- and moderate-income consumers is admirable, there's real concern among some industry observers that their tactics could backfire and wind up driving many people out of the financial mainstream.

Already, several banks have done away with free checking to compensate for lost income from overdraft fees, and it's a good bet that many more will follow once the reality of the new rules sets in. A provision in the regulatory reform bill that would lower interchange fees on debit transactions-a measure championed by merchants and strongly supported by consumer activists-also could force banks to raise fees on checking accounts.

These fee increases will likely hit less-affluent bank customers hardest.

In a recent appearance on CNBC, Rochdale Securities' analyst Dick Bove said that by this time next year, 10 million consumers with bank accounts could be "out in the street" because they won't be able to afford the monthly maintenance fees banks will need to charge to make up for lost credit card, overdraft and interchange income.

Without bank accounts, these consumers will have little choice but to turn to payday lenders and check cashers for everyday banking services, Bove said.

Karen Shaw Petrou, a longtime industry consultant, said in a note to her clients recently that while it's too soon to assess the full impact of the Dodd-Frank Act and Consumer Protection Act, the one certainty is that the new laws "will redefine retail banking in ways that will come as a shock to higher-risk consumers and ... the policymakers who love them."

These claims aren't new; in the debates over interchange and overdrafts, bankers warned repeatedly of "unintended consequences," like the end of free checking and higher monthly maintenance fees.

Still, 10 million? Even if Bove's prediction is on the high side, it's safe to say that steering more business toward payday lenders was not what consumer groups and lawmakers intended as they were pushing for more consumer "protection."

The overdraft legislation is already in effect and it's the new reality banks must adjust to. That's fine. It should be up to the consumer, not banks, to decide when overdrafts should and should not be covered.

But the interchange cuts have not been implemented yet, and if Congress is serious about drafting a corrections bill that would clear up ambiguities in the 2,300-page financial reform legislation, the very first thing it should do is reconsider this most ill-conceived provision. If lawmakers want to stand by consumers then they should stand up to the merchant lobby.

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