The Consumer Federation of America, the National Consumer Law Center (on behalf of its low-income clients), the Center for Responsible Lending, Consumers Union, Consumer Action, National Association of Consumer Advocates and U.S. Public Interest Research Group have sent a letter to Acting Comptroller of the Currency John Walsh, urging the Office of Comptroller of the Currency (OCC) to adopt stricter guidance that requires banks to use fair overdraft practices and fully inform consumers.

The nation’s largest banks charge customers overdraft fees averaging $35 per transaction, often adding up to hundreds of dollars per day. The most common triggers of overdraft fees are small debit card transactions—which cost the consumer nothing when they are simply denied due to lack of funds.

Over the summer, a new Federal Reserve rule went into effect requiring banks to get consumers’ consent or “opt-in” to pay overdraft fees for debit card single purchase and ATM overdrafts. But because the Fed did not address the size or frequency of overdraft fees, banks still have strong incentives to push customers to opt in, and then continue to barrage them with fees.

Banks are sending letters to consumers trying to persuade them to opt into paying steep fees for overdrafts, saying that they may need this service in an emergency, when, in fact, banks typically carry a far lower-cost option – an overdraft line of credit – and many also offer transfers from savings accounts or credit cards, which are also usually less expensive. But banks obscure these lower cost options.

Now the Consumer Federation of America (CFA) says support for a new consumer financial protection agency is growing.  The group says a recent survey indicates support for a new agency to look out for consumers is now at 62 percent (of those surveyed) as compared to 57 percent.

Now look at this loaded question: 

Folks were asked a number of questions including “ Do you believe that consumers need more effective protections against unfair and deceptive practices by banks and other financial institutions?”

I wonder how it would have turned out if they asked, “Do you believe that a new government bureacracy is needed to regulate your financial choices?”

A better option is already in place in some states and for the military — keeping short-term or small loans under a 36 percent annual interest rate, which is high enough. Representative Maxine Waters, a Democrat from California, assessed the Guttierez bill correctly when she said: “We’ve got to resist any attempt to make it look as if we are cracking down, when in fact we are opening the door to more abuse.”

As we said below, the military is now on charity.  Is that what the New York Times is proposing for the rest of the country?  Oh, and they spelled Gutierrez wrong!

At the end of 2006, Congress effectively banned payday loans for military personnel, capping loans to such borrowers at 36 percent. If Congress considers payday loans bad for the national’s military force, they should also be considered unwise for the rest of Americans.

As we’ve point out in this space, no lenders stepped in to make loans at 36%.  Military personnel now get charity from the military relief societies.

Most importantly, we got to see the testimony and deserved grilling of Jean “Queen of Hearts” Fox, from the Consumer Federation of America. Despite having evidence and testimony that directly contradicted her rigid ideological position right there in the room, she rambled on insistently about irrelevant APR calculations, how the loans are bad for people, and why rates should be capped at a level so low as to effectively ban lenders. All this, while there was a real-life, flesh and blood Alice three seats away saying how glad she was that the product was there for her, and that she hopes it’ll be there if she needs it in the future! But The Queen of Hearts kept insisting “Off with their heads!” Fox thus made her case perfectly – that opponents like her are living in Wonderland, out of touch with reality.

To the committee’s credit, they drilled her on the most important issue: if you ban payday loans, where will people go for short-term credit? The Queen got slapped back on every ridiculous alternative, right down to obscure credit union programs that barely cover 1% of the country. To anyone who still doubts that payday loans have a place, watch her testimony. She represents you, and she made the industry’s case for them.

I think Seeking Alpha shows a lot of intelligence and thoughtfulness in this blog post.

“Car title loans: Good option for fast cash?”

“Refund Anticipation Loans: Ripoff or Royal Screwjob?”

In 25 years in media and public relations, the Payday Pundit has never seen the word “screwjob” used in a headline. 

With tidy lobbies that resemble bank branches, many outlets are in shopping centers anchored by Wal-Marts, grocery stores or other big retailers. Lenders say their typical customers include homemakers, firefighters and teachers, whose steady jobs qualify them for loans.

Yes, the typical customer is the typical American. 

Here’s the side bar to the article:  “How payday loans work.” 

Short of cash to fix her ailing BMW this year, Lunetta Blanks could have paid the bill with plastic. Instead, the federal investigator opted for a payday loan, shelling out $300 to pay off a $255 loan from the Advance America branch in her Silver Lake neighborhood.