August 1, 2008
Jennifer J. Johnson
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW.
Washington, DC 20551
RE: Comments on Proposed Rule on Overdraft Fees, Docket No. R-1314
Dear Ms. Johnson,
We are opposed to the proposed rules amending Regulation AA as it applies to overdraft fees.
We believe the current regulations require sufficient disclosures to protect consumers should
they overdraw their account. Additional regulatory requirements will only add to the over-
burdened regulatory environment in which financial institutions must operate. These rules will
be costly for small and mid-size institutions to implement and the added cost will ultimately
have to be passed on to the consumer. Additionally, the technology requirements will create
serious difficulties for small and midsize financial institutions to execute, putting them at a
competitive disadvantage with larger institutions.
The practice of covering overdrafts, historically, has been a way to accommodate good
customers. With the advent of ATMs, ACH payments and debit cards, it has become easier for
customers to unwittingly overdraw their account. In response, financial institutions have
extended the practice to virtually all customers in an effort to retain customer relationships.
Covering an overdraft can save customers the embarrassment of a returned check as well as
the added merchant fees. Given the choice, most customers would gladly pay an overdraft fee
to have their check paid.
Academy Bank is a small financial institution. Many of our customers are low and moderate-
income who live pay check to pay check. For these customers, there is a higher probability that
an overdraft will occur. While we do offer overdraft protection via a pre-approved line of credit
and free automatic transfers from a savings account, these services alone are not sufficient