Obama Reining in Banks on "rip-off" Fees

Among the new banking regulations being considered on Capitol Hill, is legislation that will force banks to end the practice of charging large overdraft fees without permission in advance.

Sen. Christopher J. Dodd (D-Conn.) said, "People out there are getting whacked. They should have the right to say, 'Deny me the transaction.' "

Other Congressional Democrats have called the practice"criminal," and a "rip-off."

President Obama wants to create a new agency to oversee and enforce stronger consumer protections, including the option to decline an overdraft fee and cancel the transaction that caused it.

Currently, the banking industry retains the power to regulate itself. That means they set their own rules, which generally do not favor consumers.

According to Moebs Services, a financial research firm, overdraft fees at some banks have increased 4 percent this year. By year-end, that total is estimated to reach over $38 billion dollars - into the banks, and out of it's customers pockets.

At a time when millions of Americans are struggling through a slow economy, being hit with what could amount to hundreds of dollars in "bounced" check fees, is not a surprise most people welcome. Especially when they have no knowledge of it until after it's too late. Often, it is a simple subtraction error of a few dollars that sets the domino effect of fees in motion.

Regulating bank fees in favor of consumers may not solve all the problems of the industry, but one would be hard-pressed to find a consumer who will complain about being asked in advance if they would like to be charged $35 dollars or more - before they bounce a check.