Rep. Carolyn B. Maloney (D-NY) has introduced last week legislation designed to aid consumers by establishing equitable practices for overdraft coverage programs.
The Overdraft Protection Act of 2021 builds on protections provided in Maloney’s Credit CARD Act, which the Consumer Financial Protection Bureau (CFPB) estimated has saved consumers $16 billion in its initial year of enactment.
“Overdraft fees are predatory and hit hardest those who can least afford them — cash-strapped hard-working Americans and college students who are struggling to pay their bills, keep a roof over their heads and food on the table,” said Maloney, senior member of the House Financial Services Committee. “Making matters worse, even during the pandemic – when our country and the world was in the throes of both health and economic crises, banks charged billions of dollars in overdraft fees.”
According to Maloney, the legislation would offer consumers protection from unfair and costly overdraft fees that translate to billions of dollars annually.
“Black, Indigenous and People of Color (BIPOC) communities and small businesses in New York City were hit hardest by COVID in sickness, death, housing instability, and economic hardship,” Jaime Weisberg, with the Association for Neighborhood and Housing Development, said. “Financial institutions have an opportunity – and obligation under the Community Reinvestment Act – to support an equitable recovery, including making banking affordable and accessible. Yet, banks took in over $8.8 billion in overdraft fees nationwide during the pandemic – fees which come from people who can least afford to pay them at any time – and especially during a pandemic.”