WASHINGTON — Georgia U.S. Sen. Raphael Warnock is among a group of senators who want the nation’s largest banks to reduce or eliminate the fees customers pay when their accounts go into the red.
Letters went out Friday morning to the chief executives of seven institutions, including Wells Fargo and Truist, asking them to rethink the fines that are most often shouldered by poor families, worsening their financial situations.
The Consumer Financial Protection Bureau found that 9% of personal accounts see 10 or more overdraft penalties each year, and these accounts are responsible for 80% of all overdraft revenue. Meanwhile, banks derive huge revenue from overdraft and insufficient-funds penalties, to the tune of $15.5 billion in 2019, according to the CFPB’s research.
“These fees not only drain bank accounts but also push consumers out of the banking system and into the arms of unscrupulous and unsupervised lenders who are all too willing to overcharge them for similar services,” the letters to the CEOs say. “The result is that millions of Americans are underbanked or unbanked.”
The other institutions included in the call-out are Charles Schwab, JPMorgan Chase, the PNC Financial Services Group, the TD Group and U.S. Bancorp.
The letters note that Capital One and Citigroup have already eliminated overdraft fees, and Bank of America recently reduced the amount charged when accounts are overdrawn. Wells Fargo has a policy whereby if a customer receives a direct deposit the next business day, the overdraft fee can be waived or refunded.
Warnock, who chairs the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, is partnering with Senate Banking Committee Chairman Sherrod Brown of Ohio in this effort. Sens. Cory Booker of New Jersey, Jack Reed of Rhode Island and Chris Van Hollen of Maryland also signed onto the letters. All five are Democrats.
Each of the seven banks is asked to provide a report by April 7 outlining how it plans to reduce or eliminate overdraft fees.
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