OCC’s Hsu: ‘You Don’t Want to Be Last’ to Offer Traditional Overdraft Programs

Speaking at the ABA Washington Summit, Acting Comptroller of the Currency Michael Hsu today ramped up his rhetoric urging banks to reconsider their overdraft products. “You don’t want to be the last bank that still has a traditional overdraft program,” he said. Discussing changes that several large and midsize banks have announced to their overdraft programs in recent months, Hsu expressed his view that such reforms are “long overdue,” and signaled that all banks should be re-evaluating overdraft fees, grace periods and payment orders, among other features. “All of these are dials that banks can use.”

“It’s important to look at who your customers are, what they need and how to empower them the most,” Hsu said, adding that “the objective that we share is ‘pro-consumer’—what is going to be positive and financially empowering for customers—that’s what you want.” Hsu acknowledged, however, that “it’s very hard to paint with a broad brush,” and that consumers have varying needs and differ in their use of overdraft protection.

Hsu’s remarks came a day after the American Bankers Association released new survey data highlighting that consumers want the option of overdraft protection, with 89% saying they find it valuable, and three in four saying that in cases when they had to overdraw an account, they were glad their bank covered the payment rather than returning or declining it. Consumers also agreed that it’s reasonable for banks to charge a fee for the service, and over half said they would oppose a government proposal to prevent banks from offering overdraft protection.