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Don't like your banking fees? Tell the FDIC.

By Michelle Singletary
Sunday, August 15, 2010; G01

There are a lot of bank fees that deserve the "Slater Slide." Steven Slater is the JetBlue flight attendant who allegedly cursed an uncooperative and rude passenger, then opened an emergency exit and jumped down the aircraft's escape slide. He slid into infamy or history -- depending on your take on the story -- for deciding he wasn't going to take it anymore.

In the financial world, we're fed up with a lot of things. For example, it's time for a Slater Slide for offensively high overdraft fees and bank check-cashing policies that can boost those fees.

Let's say you use your debit card to buy your morning latte for five bucks or less and then learn your account didn't have enough to cover it. Instead of the bank denying the purchase, it allowed the transaction to go through because you have overdraft protection. Then wham, the bank hits you with a $39 overdraft fee. Or maybe you wrote a slew of checks thinking you had enough money to cover them all. You didn't, and you get hit with multiple overdraft fees.

You were careless, you admit, but the bank processed the checks in order of amount, from largest to smallest, triggering more overdraft fees than if your checks had been put through the system according to check number.

The Federal Deposit Insurance Corp. says it is sympathetic to your financial pain and frustration, and it plans to issue new guidance for automated overdraft payment programs administered by the financial institutions it regulates.

With changes in technology, the number of transactions that can trigger overdraft fees have substantially increased to include not only paper checks, but also ATM withdrawals, debit-card use, preauthorized debits, telephone fund transfers and online banking transactions, said Sandra L. Thompson, director of the FDIC's division of supervision and consumer protection.

Under new proposed guidelines, the agency wants banks to closely monitor overdraft programs to look for customers who excessively or chronically overuse overdraft protection. If a customer is charged an overdraft fee six times in 12 months, the institution would have to contact the person to discuss less-costly alternatives to automated overdraft payments, such as linking his or her checking account to a savings account, overdraft lines of credit or a small loan.

"We are just making sure consumers have a good understanding of what their options are," Thompson said.

The FDIC wants institutions to impose appropriate daily limits on overdrafts by, for example, limiting the number of transactions that will be subject to a fee or providing a dollar limit on the total fees that will be imposed per day.

Additionally, the FDIC is seeking comment on whether it should have banks provide information to habitual overdraft users about how to access free or low-cost financial education workshops or individualized counseling to learn how to better manage their money. I love this idea because it helps customers become more responsible.

The FDIC is also putting on the table a banking practice that really steams people. The agency wants banks to review how checks are processed.

A federal judge in California recently ruled against Wells Fargo in a class-action lawsuit, ordering the institution to pay California customers $203 million for processing checks in order of amount, from high to low -- a practice that resulted in increased fees for customers.

"What we don't want is check-clearing procedures that are designed to maximize customer overdraft fees," Thompson said.

To comment on the proposed guidelines, send an e-mail no later than Sept. 27 to overdraftcomments@fdic.gov or a fax to (703) 465-4303.

"This guidance proposes common-sense ways to mitigate risks to both consumers and banks," said FDIC Chairman Sheila C. Bair. "Ensuring that their customers are educated on the appropriate use of overdraft payment programs is just one more example of how community banks understand their customers and play a role in helping individuals find suitable financial products." The FDIC issued the proposed guidelines just a few days before a new Federal Reserve rule about overdrafts took effect. Starting today, if you are an account holder and have not opted in for overdraft protection, your debit card and ATM transactions will be declined if you don't have enough money in your account.

Part of the reason regulators have been implementing tougher banking standards is because customers were fed up. Consumer complaints to the FDIC about overdraft protection programs almost doubled from 2008 to 2009.

Although I don't think we should make Slater a hero for his actions, there are times you need to say enough is enough.

Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions might be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

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