Press Releases

Washington, DC--- Today, Congressman Hodes announced his support for legislation to protect consumers from automatic fees that substantially penalize individuals who overdraw from their bank account. These overdraft fees alone resulted in $37 billion in revenue for banks last year. Congressman Hodes is an original cosponsor of the Overdraft Protection Act of 2009, which the House Financial Services Committee is expected to consider this week.

"Overdraft fees often punish New Hampshire families while padding Wall Street’s bottom line," Congressman Hodes said. "Working families that are struggling to pay their bills should not be forcibly enrolled in programs that result in billions of dollars for Wall Street’s coffers. New Hampshire families should be allowed to choose whether or not they participate in overdraft fee programs, and should fully understand all of their available options. I am committed to pushing for strict new overdraft fee rules that put Main Street families first."

New bank customers are often automatically enrolled in overdraft fee programs when they open a new account. When a customer makes a purchase that costs more than he or she has in their account they are charged a fee, often between $25 and $35. If the customer continues to make purchases of even a few dollars, each new charge will result in an overdraft fee. A few small purchases over the course of several hours, when the customer does not know they have overdrawn their account, could result in hundreds of dollars in overdraft fees. Some banks have decided to allow consumers to opt out of overdraft programs, and others have reduced the fees. However, many banks continue to automatically enroll individuals in these programs that have proven to be a windfall for Wall Street.

The Overdraft Protection Act of 2009 would require banks to have customers’ written approval before they are enrolled in an overdraft fee program. It would also require banks to warn customers if an ATM withdrawal will overdraw the customer’s account, as well as limit the number of overdraft coverage fees banks can charge to one per month and six per year. Finally, the legislation would make it illegal for banks to reorder transactions in order to charge extra overdraft fees.

###