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Fed Restricts Overdraft Fees

Posted on Nov 12, 2009

Many consumers were unaware they had been automatically enrolled in overdraft programs, subjecting them to fees, the Fed said.

Thank the regulatory heavens. The Federal Reserve is moving to prohibit banks from charging overdraft fees on ATM and debit card transactions unless the customer has opted into a program agreeing to pay the extra charges. Banks raked in $37 billion in fees last year, largely through unexplained programs and extraordinarily high levies. —JCL


The Federal Reserve will prohibit banks from charging overdraft fees on automated teller machines or debit cards, unless a customer has agreed to pay extra charges for exceeding account balances.

Financial companies will have to explain overdraft programs and fees, as well as choices available to consumers, the Fed said today in a statement announcing a rule that takes effect next year. Lenders collected almost $37 billion in overdraft fees last year, according to research firm Moebs Services Inc.

“The final overdraft rules represent an important step forward in consumer protection,” Federal Reserve Chairman Ben S. Bernanke said in the statement. “Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service.”

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PatrickHenry's avatar

By PatrickHenry, November 14, 2009 at 5:30 pm Link to this comment

Overdraft fees?

They should be working on caps on comphensation for CEO’s of publically traded companies.

A good start would be to hire 1000 CPA auditors with staff for the SEC, replace the current head with a prosecutor.

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By Stephen, November 13, 2009 at 8:47 am Link to this comment
(Unregistered commenter)

I think this is the correct way

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no mans land's avatar

By no mans land, November 13, 2009 at 7:59 am Link to this comment

The only reason the Fed is doing this is because there is renewed effort to form a consumer protection agency that would take some of their control away. This is just an olive branch to quiet the critics who rightfully belive that they failed in their supposed regulatory role.

None of us should ever forget that the Federal Reserve in incorporated.

From the Federal Reserve Act of 1913.

“4. General Corporate Powers
Upon the filing of such certificate with the Comptroller of the Currency as aforesaid, the said Federal reserve bank shall become a body corporate and as such, and in the name designated in such organization certificate, shall have power—

First. To adopt and use a corporate seal.”

Yes, they were created by the federal government and they do have a board of governors that is federally appointed. However, that board of governors is always appointed from the very banks that comprise the Fed. They serve outlandish terms, 11-14 years in most cases. And, there are no real checks and balances on them. Congress can call the chairman in for hearings, which is mere theater. The only other option they have is to impeach the Fed and end it.

The Fed has become a de facto fourth branch of government-for-profit that came into existence under very dubious circumstances. The major banks that received bailouts are the same banks that comprise the body politic of Federal Reserve Inc.

Do not be fooled by these robber barons. They are not federal and they have no reserves. They have interest-bearing government bonds that they purchased with mere ledger entry additions to their doposits. These frauds never put up any wealth or risk of their own to gain government bonds that they reap a windfall on. They are getting paid twice, fist in the interest they charge us to borrow money they never had, and second through the taxes we are charged to pay for the interest on those bonds.

Requiring “permission” for late fees will do nothing to alleviate the public of its, privately owned and adminsitered, debt-based, sharecropping monetary system and currency. Its nothing more than shoving a pacifier in the mouth of screaming and hungry babe.

We need to do much more than demand a consumer protection agency that will probably only end up being run by more insiders.

We need to demand a complete investigation of the Fed for Fraud and Anti-Trust violations.

If/when they are found guilt, we should their assets and use them alleviate the debts burdens of people they’ve used to defraud the nation.

And, we need a complete overhaul of both currency and banking. Put currency creation back under the Treasury and regulate then shit out of these thieves who hide behind the cheap lollipops they hand out at the drive through.

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G.Anderson's avatar

By G.Anderson, November 12, 2009 at 9:35 pm Link to this comment

Makes me wonder, where’s my overdraft fee on the banks that got billions of dollars for not balancing their check books?

I think the American people are entitled to a little pay back, for covering the banks over drafts?

Those bankers are so slick, can’t wait till the government opens it’s own bank, mabybe at the post office..

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By RonD, November 12, 2009 at 7:35 pm Link to this comment
(Unregistered commenter)

When banks are prohibited from reaching into your righ pocket to steal money from you, they will go into your left pocket. This reg won’t work.


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Leefeller's avatar

By Leefeller, November 12, 2009 at 6:02 pm Link to this comment

Sounds like we get fake reform from the Democrats or get to bendover and spread them from the Republicans, a clear cut choice!

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Samson's avatar

By Samson, November 12, 2009 at 12:06 pm Link to this comment

You’ll also probably get a little booklet in the mail from you bank that details the new terms and conditions on the account.  The letter or booklet will tell you that by keeping your account past a certain date, you are automatically agreeing to these revised terms and conditions.

That’s what this just got you.  Somewhere a forest will be cut down in order to print new booklets of fine print and to mail them to each customer.

You can show your appreciation by voting Democrat again next time.

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Samson's avatar

By Samson, November 12, 2009 at 12:02 pm Link to this comment

Same thoughts as Carl.

Of course, this is the sort of fake reform that one would expect from an administration elected with millions in support from the banking industry.

It looks good on a press release.  The Democratic supporting sites and media, like Truthdig, will trumpet it like it actually means something.

Soon, when you log into your online banking, you’ll be forced to ok a new set of account rules in order to proceed.  Look closely and you’ll find this in the fine print, that you are agreeing up front that you’ll pay insanely high fees.

Thanks Obama and the Democrats.  This is some really important and serious reform you are giving us.  Of course, I don’t really see how anyone could ever expect anything from candidates and parties funded by the bankers.

Next time, try voting for someone else besides the candidates that take millions from the banks.

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By Carl, November 12, 2009 at 11:02 am Link to this comment

What a BS story. This just means banks must add another sentence in their booklet of fine print on things customers must agree to.

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