USA Today posed a question to readers

From USA Today:

Bair said that any major restriction to bank policies “needs to be done very carefully, given the state of the industry.”

She supports regulation to require banks to get consumers’ permission to approve transactions that overdraw their accounts and charge a fee. She also believes overdraft coverage should be treated as a loan, which would require banks to calculate and disclose the average APR to consumers. In the past, banking regulators have said that overdraft coverage is a credit product, but have stopped short of regulating it as a loan.

USA Today reports on a new study that shows “credit card issuers slashed credit for an estimated 24 million borrowers who paid their bills on time, and a third of those consumers saw some drop in their credit scores during a six-month period.”

Kathy Chu reports in USA Today:

Banks and lenders are shoring up risks — closing a record number of credit card accounts and reducing millions of dollars in credit lines. As they clamp down, even some consumers with excellent credit and spotless payment records are seeing their credit scores reduced because of the diminished credit lines. That, in turn, can hamper consumers’ ability to get credit elsewhere.

…Bank officials say they’re aware of growing concerns about the effects credit-line reductions and account closures are having on credit scores. But as the economy worsens, they say, more consumers are struggling, so it’s only natural that institutions take steps to reduce risk before borrowers default.

This story in USA Today details deals that universities make with banks to market debit and credit cards to students.  Andrew Cuomo, New York AG, is investigating these arrangements.   Most interesting is the chart at the very end of the story.  Because students write smaller than average checks (about $12) the per dollar cost of a bounced check fee is enormous, twice that of an adult. 

The Center for Consumer Freedom has a great letter to the editor in today’s USA Today responding to a recent editorial on payday lending.

“USA TODAY’s editorial on payday loans invoked the Federal Deposit Insurance Corp.’s (FDIC) stance in support of putting caps on these loans…But the FDIC’s own chairwoman authored a study in 2005 that painted a very different picture. Her report shows that payday loans can be a lower-cost option than bounced check or overdraft fees and that credit unions are sometimes not available as a reasonable alternative.”

Well said.

http://blogs.usatoday.com/oped/2008/02/keep-payday-loa.html