Community Banks Face Regulatory, Competitive Pressures to Alter Overdraft Policy

Banking Law attorney Charles Stutts spoke with S&P Global Market Intelligence about how community banks are facing regulatory and competitive pressure from the Consumer Financial Protection Bureau to follow in the steps of the nation's biggest banks and alter, reduce or eliminate their overdraft fees. Community banks will be less likely to take drastic steps in this direction because of their greater dependance on overdraft fees for revenue. However, Mr. Stutts believes that the growing scrutiny may force them to rethink their overdraft practices.

"There's certainly going to be pressure or scrutiny placed upon all institutions, no matter what size, no matter if they're federally chartered or state-chartered. The focus will be on enhanced disclosures, and then customer communications and resolution to those instances where they are charging the fees," he said

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