The Federal Reserve Boards Final Rule on Overdraft Programs: The Final Word?
By Todd Beauchamp & Lawrence Kaplan
The Board of Governors of the Federal Reserve System (Board) recently promulgated a final rule (Final Rule) amending Regulation E to require that financial institutions obtain an accountholders consent prior to assessing any fees or charges in connection with the payment of any consumer overdraft for any ATM or one-time debit transaction. This move represents the latest in a series of actions by federal banking regulators and Congress to provide greater consumer protections generally (such as those provided by the recently enacted CARD Act and the regulations proposed thereunder) and, as discussed below, to specifically address various issues related to the overdraft programs provided by financial institutions. This rulemaking will require a significant effort, in terms of both staff time and financial resources, on the part of financial institutions to ensure their compliance by the effective date.