D.C. misses the point about overdraft: It helps consumers

House Democrats want legislation limiting overdraft fees to one per month for each consumer, and no more than six fees in a single year. But draconian steps like this and others like it would remove a safe and convenient option for consumers managing their budget and expenses.

The Consumer Financial Protection Bureau expressed a similarly heavy-handed view on overdraft in an August report indicating the belief that consumers may not fully understand the overdraft product. The CFPB released four sample disclosures to make it easier for users to evaluate the costs and risks of overdraft coverage. These new forms are currently being tested on consumers.

The CFPB apparently feels that all consumers are ignorant. CFPB Director Richard Cordray said consumers “need to better understand how an overdraft works and whether they want to take the risk of paying overdraft fees on debit-card transactions and ATM withdrawals.” But this point seems to overlook the reality that debit cards, ACH and ATM withdrawals — not checks — are how most consumers conduct business today.

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