Congress is once again targeting banking overdraft charges which earned U.S. financial institutions $32 billion in additional fee revenue in 2012. This was an increase of $400 million from 2011. Reps. Carolyn Maloney, D-N.Y., and Maxine Waters, D-Calif., introduced a bill to limit the cost of overdraft fees. The bill specifically targets practices which are likely to result in customers overdrawing their accounts.
The Overdraft Protection Act would limit overdraft coverage fees in various ways. Key provisions of the bill include:
A number of these provisions address many of the techniques financial institutions use to make their money. It is common practice for banks to clear debits from the highest dollar amount to the lowest. This results in a mortgage payment being cleared but then having five smaller amounts like buying coffee and getting gas each incurring overdraft fees.