ABA opposes overdraft bill, calls credit report bill flawed

The American Bankers Association is asking House Financial Service Committee members to oppose two bills that would rewrite federal rules on overdraft fees and the use of credit information in determining mortgage loan eligibility. Both bills are scheduled for markup by the committee this week.

The Overdraft Protection Act (H.R. 4277) would restrict the ability of banks and other financial institutions to collect overdraft fees and mandate disclosure about their fee policies. In a letter sent to committee members today, ABA said the bill upends a framework established in 2009 when the Federal Reserve amended Regulation E to require customers to opt in for overdraft protection for one-time debit card (in-store, point-of-sale purchases) and ATM transactions.

“If the Overdraft Protection Act is enacted, depository institutions would be prohibited from charging consumers more than one overdraft fee in a month and more than six overdraft fees in a year, regardless of a consumer’s choice to opt-in,” ABA said.

The Expanding Access to Credit through Consumer-Permissioned Data Act (H.R. 8485) would require lenders to consider additional, alternative information not typically considered when evaluating a borrower for a mortgage, and not typically found in credit reports. While calling the bill well-intentioned, ABA said the legislative text was flawed, adding new mandates and burdens to the mortgage process. The association also said the bill does not clearly define what additional data sets should be considered, and that it adds more complexity to the already extensive disclosures provided in the mortgage process.