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Fishback Financial Corporation
From: Paula Wagner
Sent: Friday, August 06, 2004 8:04 PM
To: Comments
Subject: Interagency Guidance on Overdraft Protection Programs-Comments
Robert E. Feldman, Executive Secretary
Attention: Comments, Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429
Subject: Interagency Guidance on Overdraft Protection Programs
Dear Mr. Feldman:
Fishback Financial
Corporation ("FFC"), the holding company
for four
community banks, welcomes the opportunity to comment on the Interagency
Guidance on Overdraft Protection Programs ("Guidelines").
Our holding
company is comprised of two national banks and two state, nonmember
banks, with combined total assets of $800 million. While we commend
the
Federal Financial Institutions Examinations Council ("FFIEC")
and its
member agencies for attempting to provide financial institutions
with
clarity regarding overdraft protection programs, we appreciate this
opportunity to voice concerns about some of this proposal.
In the Safety and Soundness section of the Guidelines, the first
area
of concern surrounds the recommendation for overdraft balances to
be
charged off within 30 days from the date first overdrawn. Such a
stringent timeframe will be potentially detrimental to consumers.
In
making the window only 30 days, more consumers will end up with charged
off accounts on file at the credit reporting agencies. As a result,
these consumers will find it more difficult to obtain banking services
in the future. While the aim of this particular guidance is to protect
consumers from burdensome overdraft protection program balances,
this
provision may inadvertently cause greater potential harm for consumers.
A 30-day period is a minimal amount of time and many consumers may
have
difficulty repaying the overdraft charges in that length of time.
It is
our belief that if this period were extended to a length of 60-90
days,
this would enable the consumer to pay back any overdraft charges
without
facing the negative repercussions of having a charged off account.
Additionally, any safety and soundness concerns on behalf of the
banks
are still appropriately addressed with a 60-90 day timeframe.
Furthermore, the section of the Guidelines that calls for banks
to
alert customers before non-check transactions trigger any fees or
charges, is also troublesome. As the Guidelines do not specifically
address POS terminals, there is a question as to whether or not the
Guidelines create an expectation that financial institutions should
not
make overdraft protection programs available at POS locations. Most
certainly, customers desire the ability to access their overdraft
protection limits at POS locations. The vast array of ATM and POS
systems are driven by the same balance mechanisms; therefore, regulatory
forbearance is necessary until technology advances with new banking
products.
While we agree that it is a best practice to prominently distinguish
actual balance from overdraft funds availability, we request that
regulators have tolerance for smaller financial institutions that
lack
the ability to differentiate between actual balance and overdraft
funds
availability due without incurring inordinate expense. If required
to
differentiate, it may inhibit some institutions from providing a
product
desired by many consumers. We believe that if a good faith effort
is
made on the part of the financial institution by providing notices
on
their bank-owned ATMs, using pre-printed receipts for balance inquiries
advising of their limit inclusion, and by providing clear prior
disclosures, that they should be allowed to continue providing overdraft
protection at their ATM without undue criticism.
We also wish to acknowledge the fact that the proposed Guidelines,
adopted in whatever format, should be recognized and promoted as
truly
guidelines to be used as simply a guiding tool. In the absence of
governing federal law or regulation, the Guidelines must be invoked
in a
reasonable manner that encourages compliance and not cause undue
regulatory burden for community banks.
Thank you for the opportunity to comment on this important issue.
Sincerely,
Paula Wagner
Director, Corporate Audit & Compliance
Fishback Financial Corporation
PO Box 5057
2220 Sixth Street
Brookings, SD 57006-5057
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