Acting Comptroller Advocates Reform Of Bank Overdraft Programs

In remarks before the Consumer Federation of America's 34th Annual Financial Services Conference, Acting OCC Comptroller Michael Hsu identified changes to banks' overdraft programs that would benefit lower-income individuals.

Mr. Hsu explained that bank overdraft fees were initially introduced as a way to maintain profit levels for banks when interest rates were falling, and were intended only for very limited use. Since then, both banks and consumers have become increasingly reliant on overdrafts - banks relying on the fees they generate ($15.5 billion in 2019) and consumers, mostly with lower incomes or little to no credit, using them as a short-term borrowing method that increases their liquidity. Mr. Hsu stated that banking overdraft fees are disproportionately charged to lower-income persons.