On the heels of news earlier this week that the country’s largest banks are once again too big to fail—and growing bigger—comes a report they made $31 billion on overdraft fees last year. The good news? That figure is down from $33 billion in 2010, according to research by Moebs Services.
The amount has now caught the attention of the Consumer Financial Protection Bureau, which is reviewing bank overdraft practices to determine whether or not to give consumers more power to manage overdraft fees, Bloomberg reports.
Citing sources briefed on the review, the news service says the agency, which will decide by the end of the year whether to write new rules, is scrutinizing nine banks including JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and Bank of America Corp (BAC).
The CFPB did not respond to AdvisorOne's requests for comment about the Bloomberg piece.
“The inquiry focuses on how financial institutions persuade customers to enroll in what they call overdraft protection programs,” the article says. “Examiners are looking at online and mailed marketing material as well as scripts used by the banks’ customer-service representatives to determine whether they could be confusing to consumers.”
As Bloomberg notes, tighter potential is something of a double-edged sword. While tighter rules could help consumers, they also could threaten a major revenue stream for banks already struggling to replace income pinched by new regulations including a cap on debit-card “swipe” fees, leading to a repeat of the controversy last year over Bank of America’s $5 charge.
Richard Cordray, the CFPB director, disclosed the overdraft inquiry in general terms on Feb. 22. In a recent interview, he said the agency was looking at “a lot of data” as it coordinated with other federal regulators on the subject.