There was an interesting article in Monday's Washington Post about potential legislation that would require banks "to get permission from customers, rather than allowing overdrafts automatically." In other words, customers would have to "opt in" to allow banks to pay items creating an overdraft and, if not, any items causing an OD would be rejected, thereby potentially limiting the amount of overdraft fees collected. Who knows if this legislation will pass both the House and Senate and/or how it might change along the way. However, U.S. Bank's executive management has been aware of this possibility and the potential impact on our fee revenue, so it's not an unexpected development.
Both JP Morgan Chase and Bank of America are trying to head things off at the pass with announcements yesterday that they will (according to a New York Times article) "drastically overhaul their debit card programs by lowering or eliminating fees, changing the way they credit transactions and allowing customers to opt out of overdraft protection." Chase is even planning to begin posting transactions chronologically, rather than from highest to lowest dollar amount, beginning sometime in the first quarter of 2010. (I wonder how U.S. Bank will respond?)
And how does the average American feel about it? The Consumerist took a pool and while the results are non-scientific poll, the response was pretty overwhelming: 96% of respondents think overdraft protection should be something customers should have to "opt-in" to get. (Until the first time they became overdrawn, anyway!)
And how did the market react to all this news? Bank stocks were all down today . . .