Compliance Blog

The FDIC recently released a detailed report concerning overdraft protection programs, commonly referred to as "bounce protection." Here's a link to the study.  Here's a link to the 5-page executive summary.  If you want a good summary of the product or want to benchmark yourself (fees and characteristics of the ODP program) against other financial institutions, this is a good read.  Remember, the regulation and guidance for these programs for credit unions currently is in Truth in Savings, and Letters to Credit Union 05-CU-03, 05-CU-21.

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Speaking of overdraft protection programs, I'd like to chat with you about compliance shock testing.  The Democrats made gains in the House and Senate.  And President-Elect Obama will soon sit in the Oval Office.  Democrats will have a good opportunity to move consumer-oriented bills more easily than before.  With that in mind, here are some thoughts.

• Overdraft protection.  What if your income from overdraft protection programs went away?  And I don't mean down by 50%.  I mean - gone. Completely.  There were bills in this session of Congress that would have done that by making such fees finance charges.  Such bills could resurface again.
• Interchange fees.  What if your income from interchange fees went down by 25 percent?   50 percent?  In this session of Congress, there was talk of regulating these fees.  Such talks could resurface next year.
• What if bankruptcy judges could "cram down" mortgages filed under Chapter 13 of the Bankruptcy Code.  There's talk of giving judges that power via new legislation.

A new Congress brings new ideas and new challenges. Some potential bills could have major effects on the bottom line of credit unions.  Again, I'm not saying that aspects overdraft services and interchange fees will be changed in the next few years. 

But I can't say that they won't change, either.