Testimony of
Jean Ann Fox
Director of F inancial Services
Consumer Federation of America
On Behalf Of
Consumer Action
Consumers Union
National Association of Consumer Advocates (N A C A)
National Consumer Law Center (on behalf of its low income clients)
US PIR G
Before
The Senate Committee on Banking, Housing, and Urban Affairs
Regarding
S. 1799, the F A IR Overdraft Coverage Act
November 17, 2009
2
Chairman Dodd, Ranking Member Shelby, and members of the Committee, I appreciate the
opportunity to testify in support of the F A IR Overdraft Coverage Act, S. 1799, on behalf of the
Consumer Federation of America1, as well as Consumer Action,2 Consumers Union,3 USPIRG,4
National Association of Consumer Advocates,5 and the National Consumer Law Center (on
behalf of its low income clients).6 We also commend Chairman Dodd for the financial reform
discussion draft he released last week, and in particular, his proposal for the creation of a
Consumer Financial Protection Agency. This agency would not only implement the FAIR
Overdraft Coverage Act, but also enforce the law and clamp down on other high cost loan
abuses. The agency will monitor the marketplace both for evasions in current law and watch out
for new products and services designed to trip and trap consumers.
We appreciate your interest in protecting consumers from unauthorized and extremely expensive
overdraft loans, the banking equivalent of payday lending. 0DUNHWHGDV³RYHUGUDIWSURWHFWLRQ´RU
³FRXUWHV\RYHUGUDIW´IHH-based overdraft programs protect WKHEDQNV¶DELOLW\WRPD[LPL]HIHHV
while jeopardizing the financial stability of many of its customers. Rather than competing by
offering lower cost and truly beneficial overdraft products and services, many financial
institutions are hiding behind a smokescreen of misleading terms and opaque practices that
promote costly overdrafts.
Without asking for their consent, banks and credit unions unilaterally permit most customers to
borrow money fro