Throughout the past decade — and in recent years, particularly — political livelihoods have been made and broken on what some see as government overstepping boundaries on business regulations.
That issue might get further play in Michigan after a local senator introduced a package of bills late last week that would regulate overdraft fees at state-chartered banks.
Michigan Senate Minority Leader Gretchen Whitmer, D-East Lansing, reintroduced the bill package last Thursday in hopes of adding a layer of consumer protection for citizens who pay hundreds of millions of dollars in overdraft fees.
But some say the move might contradict federal regulations already in place and decrease the banks’ ability to be competitive.
“Michigan’s share of overdraft fees is estimated to cost citizens more than $576 million,” Whitmer spokeswoman Katie Carey said.
“Consumers need to be protected from unfair fees and be aware of hidden fees.”
Whitmer’s first attempt at getting such legislation passed failed when a similar bill last legislative session failed to clear committee before the Legislature adjourned for the year. The latest bill has been referred to the Senate’s Banking and Financial Institutions Committee, whose members were unavailable for comment Thursday.
The bill would not apply to credit unions such as MSU Federal Credit Union. Instead, it would regulate the number of overdraft fees state-chartered banks are able to levy against account holders who spend more money than what is in their checking account.
Banks only would be able to impose a fee for one overdraft charge during a 24-hour period. Should more than one overdraft charge occur, banks would be required to impose a fine for the smallest of the charges. The institutions also would be required to post the amount of overdraft fees on their websites.
But Gail Madziar, vice president of membership and communications for the Michigan Bankers Association, or MBA, said federal overdraft regulations that took effect last year defeat the purpose of legislation on the state level.
The MBA represents a number of Michigan banks whose branch locations total more than 2,300.
Under the federal rules, banks are unable to fine account holders for overdrafts unless the holder gives prior consent. Otherwise, account holders’ transactions are rejected. The regulations only apply to ATM and debit card transactions.
“National charter banks wouldn’t have to apply the state laws; that’s just not good,” Madziar said, adding that exemption competitively disadvantages state-chartered banks. “Any time you add more regulations, it tends to be more costly. This is not a good time to add new ones.”
Prenursing freshman Sarah Sorensen said a one-fee-per-day rule would be fair but said she understands in part where banks might need more liberties against repeat offenders.
“I definitely think (the fees) are kind of a scam by the banks,” Sorensen said. “There needs to be something against people who keep (overdrafting).”
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