In February, we launched a public inquiry and an industry research study to gain insight into overdraft practices. Both initiatives are continuing and will provide us with great perspective on how overdraft programs work.
The Notice and Request for Information for all public comments by the end of this month. While we’ve already netted a tremendous number of responses, we’ve also received requests for more time. So, we have decided to to ensure all stakeholders have sufficient time to respond to our questions and enable us to learn as much as we can from the public’s input.
Consumers sometimes use overdraft programs to meet critical cash flow needs. However, overdraft programs also have the capacity to inflict serious economic harm on individuals. We heard numerous stories at our event in New York and since of how consumers racked up large fee balances, sometimes unknowingly. At the same time, we appreciate consumers can benefit greatly by having their bank or credit union cover an important payment that may have otherwise bounced.
We are committed to being an information-driven organization. In our quest to monitor risks posed to consumers in the financial services marketplace, we have set out to understand the impacts, both good and bad, that consumers derive from bank overdraft programs. In addition to how overdraft programs work, we are interested in:
- How consumers utilize overdraft programs,
- The information provided to consumers that inform their everyday banking decisions,
- Alternatives consumers have for meeting short-term shortfalls,
- How recent regulations and changes in bank products and terms have impacted overdraft incidence, and
- The costs financial services providers incur to provide banking and overdraft services.
The information we collect will inform how we regulate and the guidance we give to consumers to make smart financial decisions.