November 18, 2009

Dodd Regulatory Restructuring Proposal
AmBA today is issuing a grassroots alert urging all bankers to express strong opposition to Senate Banking Committee Chairman Chris Dodd’s (D-Conn.) draft financial regulatory reform bill. The draft -- introduced last week -- is even more problematic than the Obama administration’s original proposal and would impose heavy new regulatory burdens on traditional banks that did not cause the financial crisis, AmBA said.

While AmBA supports broad reform that would close gaps in the regulation of nonbanks and end too-big-to-fail, this legislation takes reform in the wrong direction by, among other things:

• Creating a single federal regulator by eliminating the Office of the Comptroller of the Currency and Office of Thrift Supervision and stripping all prudential regulation from the FDIC and the Federal Reserve. The new agency would undermine the dual banking system and put community banks at a regulatory disadvantage.

• Creating a new, powerful Consumer Financial Protection Agency that is authorized to design financial products and mandate that banks offer them.

• Eliminating charter choice by eliminating the thrift charter, which would cause great hardship and be costly to existing thrift institutions.

“This regulatory reform legislation is the most important legislation our industry has faced in 70 years, and it will determine the very future of banking,” the alert says. AmBA’s automated system offers sample, customizable letters expressing opposition to the Dodd reform bill and the elimination of the thrift charter.

Overdraft Bill Would Result in Less Access, Higher Cost
AmBA opposes a bill (S. 1799) that would regulate and limit overdraft services, AmBA said in a for-the-record statement submitted for yesterday’s Senate Banking Committee hearing on overdraft protection. The provisions of S. 1799 -- introduced by panel Chairman Chris Dodd (D-Conn.) -- “will mean a complete retooling and redesign of checking account features,” AmBA said. “The result will be more hassle and costs for customers who find their payment returned or rejected; less access to checking account services for some people; and higher prices due to the higher cost of providing bank accounts.”

The association noted that the Federal Reserve last week adopted final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine and one-time debit card transactions, unless they opt in to the overdraft service for those types of transactions. Given these new rules which address consumers’ primary concerns on overdrafts, AmBA said there is no need for additional congressional action.

AmBA also emphasized that bank overdraft programs are successful because they provide a valuable service for bank customers and small businesses. “Most consumers generally want banks to pay their overdrafts even if it means paying a fee so they can avoid the inconvenience, embarrassment and potential cost of having a payment or transaction rejected,” AmBA said.

The association added that overdraft fees are easy to avoid, and a recent Ipsos-Reid survey conducted for AmBA shows that 82 percent of bank customers did not pay an overdraft fee in the previous 12 months, up 2 percent from the year before.