Michael Moebs, Moebs $ervices
LAKE FOREST, Ill.—One economist is questioning how The Pew Charitable Trusts can make such strong recommendations to the CFPB regarding overdrafts, and further draw conclusions about overdraft practices’ effect on “all consumers” based on a “limited” data sample.
As CUToday.info reported first, on Monday Pew released a checking account report that evaluated checking account disclosure, overdraft, and dispute resolution practices at the nation’s largest retail banks. It revealed that overdraft fees and harmful account terms have shown little change or have grown worse in the past year.
The report, the third in an annual series, recommends that the Consumer Financial Protection Bureau issue comprehensive rules to ensure that checking accounts are safe and transparent for all consumers.
“Only 45 of the 108 banks and thrifts above $10 billion in assets were used in the study,” said Michael Moebs, economist and CEO at Moebs Services, whose firm late last year completed its annual Overdraft Revenue Study that covered 2,806 depositories. “No credit unions were used, nor community banks. And there are five credit unions over $10 billion in assets. These five are well-managed and have good compliance. It is a pity that Pew won’t recognize the credit unions nor the community banks who are doing a good job at compliance and have about 60% of the checking accounts in the country.”
Moebs noted the Pew Study covered only 45 large banks and thrifts, pointing out that 45 of 6,518 banks and thrifts is only 0.69% of that group. “And 45 of 12,920 depositories, including the credit unions, is a sample of .0035%. This is not a statistical sample and poor representation of checking and fees. Moebs Services has offered Pew, the CFPB and Senator Elizabeth Warren use of our data and surveys and we have never heard from any of them.”
Moebs offered some highlights of the Pew report for credit unions:
- Overdraft Disclosures: Pew strongly urges greater clarity, transparency, and consent for overdrafts.
- Overdraft Fees: Pew wants to eliminate the use of overdrafts for debit cards, and have the CFPB determine the price of the overdraft fee that can be charged.
- Transaction Reordering: Pew wants only transactions posted as received.
- Extended Overdraft Fees: Known in the business as an OD Day Fee, Pew does not want this fee charged.
- Thresholds: Known as the “de minimis amount” or no OD fee for small amounts overdrawn, Pew wants de Minimis amounts on all checking accounts.
- Limits On Overdrafts Per Day: Pew would like to see a cap per day on the number of overdraft charges made.
- Dispute Resolution: Pew would like the member to decide how disputes are resolved.