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FDIC 2010 Overdraft Payment Program Guidance Overview & Frequently-Asked Questions March 29, 2011

FDIC 2010 Overdraft Payment Program Guidance Overview & Frequently-Asked Questions March 29, 2011. Director Mark Pearce, Division of Depositor and Consumer Protection (DCP) Associate Director Luke Brown, DCP Supervisory Policy Victoria Pawelski, Sr. Policy Analyst, DCP Supervisory Policy

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FDIC 2010 Overdraft Payment Program Guidance Overview & Frequently-Asked Questions March 29, 2011

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  1. FDIC 2010 Overdraft Payment Program GuidanceOverview & Frequently-Asked QuestionsMarch 29, 2011 Director Mark Pearce, Division of Depositor and Consumer Protection (DCP) Associate Director Luke Brown, DCP Supervisory Policy Victoria Pawelski, Sr. Policy Analyst, DCP Supervisory Policy Michael Briggs, Supervisory Counsel, Legal Division

  2. Agenda • Opening Remarks • Origins of the Guidance • Overview of the Guidance • Supervisory Considerations • Questions and Answers

  3. Origins of the Guidance • 2005 Joint Guidance on Overdraft Protection Programs • 2008 FDIC Study of Bank Overdraft Programs • FDIC Chairman’s Advisory Committee on Economic Inclusion (ComE-IN) • Examination Issues & Legal and Regulatory Actions • Comment Invited on Proposed Guidance

  4. Overview of the Guidance Scope and Focus • Automated Overdraft Payment Programs: • Established • May Be Computerized • Predetermined Criteria • No Employee Decision-Making  Versus Ad Hoc Approach to Overdraft Payments or Lines of Credit covered by Truth in Lending Act

  5. Overview of the Guidance Existing Laws and Regulations • Truth in Lending Act/Regulation Z • Truth in Savings Act/Regulation DD • Electronic Fund Transfer Act/Regulation E • FTC Act Section 5 – UDAP • Equal Credit Opportunity Act/Regulation B • Expedited Funds Availability Act/Regulation CC • Community Reinvestment Act

  6. Overview of the Guidance Existing Guidance • 2005 Interagency Joint Guidance on Overdraft Protection Programs • 2008 FDIC Guidance For Managing Third-Party Risk

  7. Overview of the Guidance Focus of the 2010 Guidance • Small Percentage of Excessive Users • Mitigate Risks • Customer Communications • Informed Customer Choice

  8. Overview of the Guidance Elements of the 2010 Guidance • Monitor Accounts • Meaningful and Effective Follow-Up • Fee Limits • Transaction Processing • Opt-Out for Transactions Not Covered by Regulation E Opt-In Requirement

  9. Overview of the Guidance More Elements of the Guidance • Board & Management Oversight • Review Marketing, Disclosure & Implementation • Staff Training • Consumer Education Resources • Advance Notice – Technology • Third-Party Vendor Oversight

  10. Supervisory Considerations Risk Mitigation and Examinations • Additional Risk Mitigation Measures in place by July 1, 2011 • Overall Overdraft and NSF Programs and Practices • Existing Laws, Regulations, Guidance • Red Flags? • 2010 Guidance • Automated Overdraft Payment Programs • Expanded Review for New Guidance • Overall Assessment of Risk Mitigation Efforts  Customer relationships, business model and justification

  11. FAQs • Ad Hoc vs. Automated • Occasion Where a Fee is Charged • Payment Suspension Not Mandatory • Meaningful and Effective Follow-Up • Continued Use

  12. FAQs • Fee Limits/Reasonable Fees • Transaction Processing • Opt-Out for Transactions Not Covered by EFTA/Regulation E • Financial Education Options • Other FAQs

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