Banks need their overdraft fees.  From the story:

A banking executive pushed back against parts of a bill that would limit the overdraft fees banks could charge customers, according to remarks prepared for a U.S. Senate Banking Committee hearing on Tuesday.

Objecting to a provision of the overdraft bill capping fees for covering insufficient funds at one per month and up to six per year, Citigroup Inc. (C) warned that as a result banks could stop paying overdrafts altogether, according to prepared testimony of John Carey, the chief administrative officer of Citigroup’s North America Consumer Banking department.

“It is impossible for banks to predict which customers will be responsible for those losses, so a very real result may be that banks eliminate payment of overdrafts,” Carey said in his remarks.

Last week the Federal Reserve announced new overdraft rules.   Now they announced new gift card rules.  This is all an attempt to demonstrate that they are consumer protection minded and should NOT  have to give power to the CFPA.

The Credit Union Times seizes on one of the most important aspects of federal financial regulatory reform; it steps on states’ power.  From the article:

Credit unions dodged a big bullet but still face potential additional regulatory burdens under the bill to revamp the way financial services are regulated unveiled last week by Senate Banking Committee Chairman Christopher Dodd (D-Conn.).
The NCUA would remain a separate agency and not part of a consolidated bank regulator but credit unions would face an additional layer of regulation and examination by the Consumer Financial Protection Agency.
While the NCUA would remain the safety and soundness regulator for credit unions, it would lose some of its jurisdiction on consumer issues to the CFPA. The bill mandates that the CFPA assess fees on financial institutions with assets greater than $10 billion, including credit unions, and says the agency can assess fees on those with assets of $10 billion and smaller.
There is no carve out for smaller credit unions and community banks as there is in the bill passed last month by the House Financial Services Committee.
“On CFPA, this bill is similar to where the House bill was when it started. There is much work that needs to be done on it on the Senate side,” said CUNA Vice President for Legislative Affairs Ryan Donovan.
Under Dodd’s bill, the CFPA would be run by a five-member board, while the House bill envisions it run by a director.
Dodd’s bill would also allow states to pass tougher consumer law than the federal government and prevents federal law from preempting state laws. That has been a source of concern to federally chartered financial institutions that operate across state lines.

From CNNMoney.com:

The House has been drafting and re-working legislation for a month, and a key committee is set to delve back into it on Tuesday. The Senate will begin discussing its lengthy version on Thursday and is expected to get into the details of the legislation next month.

But Congress is far from reaching consensus on a bill that could get the filibuster-proof 60 votes in the Senate and pass both chambers.

And there are several key issues on which the ideological gulf between the Senate and House, or between Republicans and Democrats, may not be bridgeable. The divisions could threaten passage of meaningful legislation or drag out the debate and even prevent final passage.

Read the article to see what those issue are.

Nothing new here.  From the story:

Many people with different backgrounds called for payday loan reform at the hearing — among them professors and religious leaders. Problems with high interest rates and multiple loan renewals were among the points raised. Another issue that was repeatedly brought up was whether people who use payday loans are making an informed decision.

Are the professors and religious leaders implying that the posters on the walls aren’t big enough.   There’s little evidence that costumer don’t understand the costs of a payday loan.

Senate Banking Committee will hold a hearing tomorrow on overdraft protection.  You can read about it here.

A Payday Pundit reader likes her overdraft protection:

Does Mr. Dodd not know that trying to float a check to make ends meet  doesn’t exist today?  Without this benefit from Banks a lot of people can’t make it from payday to payday.   If I need a tire fixed on my car so I can get to work on Wed and I don’t get paid until Friday with this benefit I can have confidence my check won’t bounce and I can get to work so I can pay my bills and feed my family…   obviously Mr. Dodd doens’t understand the  BENEFITS of this type of program, or what it is like to have to live on a limited income..Hello your job is to take care of the people , one time the Banks are doing something right and you take it away.

From CreditCardGuide.com:

Worst Terms First Fall Out of Credit Card Reforms

By Eva Maria Norlyk

Most pundits saw it coming: a wave of frenzy as credit issuers scramble to get their ducks lined up before the new provisions called for in the CARD Act of 2009 kick in.

Once the provisions of the new law steps into effect in August of 2010, card issuers will no longer be able to raise interest rates retroactively on existing credit card balances. In response, card issuers are doing one of two things, according to The U.S. News and World Report: Many card issuers are simply raising interest rates before the new law steps into effect. In addition, card issuers are switching many of their fixed-rate credit cards over to variable cards. This will allow them to take advantage of a loophole in the law, which continues to allow interest rate changes on cards with variable interest rates.

There is no compromise with the Center for Responsible Lending.    From their latest news release:

Statement of Eric Halperin, director of the Washington D.C. office of the Center for Responsible Lending:
“The Federal Reserve Board’s action today on debit card overdraft fees legitimizes an abusive product without providing any substantive protections for bank customers. We appreciate that the Fed chose to implement the strongest overdraft reform rule it was considering, namely requiring banks and credit unions to ask new and existing customers before charging overdraft fees on debit card transactions. But this improvement is undermined by the Fed’s failure to propose or enact necessary safeguards against a host of unfair practices.

They will not be happy until no one makes any money providing financial services to working people.

For Senator Dodd’s regulatory reforms.  From the story:

Douglas Elliott, a fellow in economic studies at Washington’s Brookings Institution, a center-left research center, liked the idea of a separate consumer financial protection agency, but with reservations.

“Existing regulators did a terrible job,” he said. “And you can’t just say OK, we’ll change the people. There were also structural reasons” for the industry’s problems.

Financial regulators tend to look more at preserving the safety and soundness of financial institutions, he said, and that often conflicts with consumer interests. However, Elliott added, a separate consumer agency could overreach and “sometimes over-regulate to protect consumers from all risks.”

Opponents of a separate consumer agency agreed.

“The current debate should not be about more regulation, but smarter regulation,” said David Hirschmann, the U.S. Chamber of Commerce’s president for capital markets.

American Bankers Association spokesman Peter Garuccio argued it’s important for the same regulator to be able to consider an institution’s safety and soundness as well as consumer interests.

Transparency and disclosure would help consumers without hindering access to credit.