September 22, 2014

Commentary on CFPB Report: Data Point: Checking Account Overdraft

  • Todd Zywicki

    George Mason University Foundation Professor of Law, Antonin Scalia Law School, George Mason University
  • G. Michael Flores

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The Consumer Financial Protection Bureau (CFPB) released a data point update of its ongoing analyses of overdrafts. We review the report and provide commentary on its findings, methodology and the inferences of this update, specifically the potential to further restrict debit card overdrafts. We suggest metrics the CFPB should use in its future analyses to help provide a more thorough assessment of the costs and benefits of overdrafts. To this end, we cite findings from our previous and other third-party analyses. Finally, we recap the larger policy questions of access to credit, alternative sources of credit, and the economic benefit attained by the use of overdrafts. We hope to add positive feedback to the CFPB as they work toward potential regulations of overdrafts. As with the CFPB’s prior efforts, this report provides no basis for additional regulation of bank overdraft protection. Further research, however, is warranted.