US overdraft fees jump at big banks amid regulatory, economic shifts

By Douglas Gillison

WASHINGTON, Dec 16 (Reuters) - Fourteen of the largest U.S. retail banks posted jumps successful the income they generated from overdraft and bounced-check fees during the archetypal 9 months of the year, portion 2 large banks reported crisp declines, according to a Reuters analysis.

The information reveals increasing manufacture divergence connected ​such fees astatine a clip erstwhile broader economical and regulatory shifts marque it much apt consumers volition brushwood them. It besides highlights that immoderate banks inactive trust ‌on overdraft fees, contempt manufacture promises to rein them successful pursuing governmental unit during erstwhile Democratic President Joe Biden's administration.

Reuters analyzed information connected overdraft and "non-sufficient funds" (NSF) charges for the 20 largest U.S. retail banks that study collecting ‌such fees to the Federal Financial Institutions Examination Council, a regulatory panel. The 20 banks correspond astir fractional of each deposits astatine insured U.S. banks.

Overdraft and NSF interest income for the radical ticked up 2% wide to $2.99 billion.

The charges mostly subordinate to overdraft fees, since astir banks person phased retired NSF charges successful caller years.

CFPB CAPS RESCINDED

The summation successful interest income coincides with legislature Republicans' determination successful May to scrap a Biden-era Consumer Financial Protection Bureau regularisation that would person curtailed overdraft fees, which the CFPB estimated would person saved depositors $5 cardinal a year.

The rule, which had been ⁠part of a Biden medication crackdown connected "junk fees," would person travel ‌into unit successful October and efficaciously capped fees astatine $5, down from the emblematic $35.

Amid Democratic governmental pressure, immoderate ample banks modified their policies to assistance customers debar the charges oregon dropped them altogether, adjacent earlier the CFPB tried to headdress them. With Republicans taking power of Congress this year, ‍the manufacture saw an accidental to termination that rule, arguing that specified "price controls" could contradict recognition to depositors successful need.

Aaron Klein, elder chap astatine the Brookings Institution who has studied overdraft policies, said economical factors apt power fluctuations successful specified revenue, with consumers much prone to becoming overdrawn erstwhile times are tough. But the representation would person been antithetic had the CFPB's regularisation survived and banks geared up to ​comply with it, helium said.

"When the watchdog was enactment to sleep, immoderate institutions went backmost retired connected the prowl, and others person stayed benignant of doing what they person been doing."

CFPB ‌2017 probe recovered that astir 80% of overdraft charges came from conscionable 9% of accounts, which had lone a fewer 100 dollars astatine immoderate time. Consumer Bankers Association (CBA) CEO Lindsey Johnson said galore consumers trust connected overdrafts to marque ends conscionable and that the manufacture had worked to little the fees.