WASHINGTON — Calling for an end to $35 cups of coffee, a group of 39 House Democrats introduced legislation Wednesday to restrict the ability of banks to levy overdraft fees.
The legislation has no foreseeable chance of enactment this year in the Republican-controlled House, but it puts its supporters on the side of consumers on an easy-to-understand financial issue.
The Overdraft Protection Act would cap the number of overdraft fees that can be charged at one per month and six per year. It would ban high-to-low reordering of transactions. It would require that fees be reasonable and proportional to the amount of the overdraft.
And it would expand an existing requirement that consumers opt in to debit-card overdraft protection to include other types of transactions.
The legislation is being sponsored by New York Rep. Carolyn Maloney, and its co-sponsors include other high-ranking Democrats on the House Financial Services Committee such as Reps. Barney Frank, Maxine Waters and Luis Gutierrez.
At a press conference introducing the legislation outside of the Capitol, North Carolina Rep. Brad Miller decried the high-to-low reordering of transactions, a practice that many banks have abandoned because of rising legal risks.
"Ordinary folks in North Carolina call that crooked. That's just plain crooked," Miller said. "And banks do it regularly. They make a lot of money from doing it, and it should not be legal."
The legislation follows a 2009 Federal Reserve Board regulation that bans overdraft fees on debit-card transactions unless the consumer opts in to the service. The bill's sponsors maintain that that rule does not go far enough.
The Consumer Financial Protection Bureau is currently investigating overdraft fees, and it is widely expected to adopt regulations, which has diminished the appetite of some members of Congress to legislate on the issue.
But Maloney insisted that the legislation is important even if the CFPB acts.
"We're working with the Consumer Financial Protection Bureau," she said. "But a rule is a rule and can easily be rolled back."