New Jersey Sen. Cory Booker and Ohio Sen. Sherrod Brown of the Senate Banking Committee introduced legislation to prevent financial institutions from charging overdraft fees during the national emergency declared in response to the pandemic.
The Stop Overdraft Profiteering Act would outlaw overdraft fees now, and for any future national emergencies that may occur, until 6 months after the emergency is lifted.
These Senators have worked together in the past on similar legislation that would curtail the application of overdraft fees on a permanent basis. Booker and Brown introduced a bill called the Stop Overdraft Profiteering Act of 2018 that sought to ban overdraft fees resulting from debit card transactions and ATM withdrawals, limit fees placed on checks and recurring payments, and control the way that banks posted transactions.
More on the current legislation from Law360:
“Millions of hardworking Americans have been thrown into financial insecurity because of this unprecedented global pandemic,” Booker said in a statement. “For these individuals, and those vulnerable before the outbreak, one $35 overdraft charge can lead to financial free fall.”
“At the height of this pandemic, hardworking Americans should be protecting their health, not worrying about big banks slapping them with fees for small overdraft amounts,” Brown added.
Brown’s office said the bill targets emergencies that are national in scope. Although presidents often declare major disasters in response to tornadoes, fires and other incidents that only impact a small region, the overdraft ban would only come into force when major disasters result in individual assistance under the Stafford Act.
The senators said they want their legislation included in the massive stimulus bill being negotiated in the Senate.
Some banks have already suspended overdraft fees during the pandemic. Ally Bank said it would skip the charges through at least July 16. Other institutions say they will consider waiving overdraft and other fees on a case-by-case basis when consumers call to ask for help.
Last week, federal banking regulators announced that, among other actions, dropping overdraft fees during the pandemic can earn banks credit toward their Community Reinvestment Act requirements.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group