The web has been abuzz about the letter that Majority Whip Richard Durbin (D. Il) and Jack Reed (D. RI) of the Banking Committee rather publicly sent to Raj Date last Thursday. Purportedly out of concern that banks will try to “sneak fees past” consumers after having mostly abandoned the monthly debit card fee program, Senators Durbin and Reed “urge[d]” the CFPB to “swiftly require financial institutions to post on their websites a standardized, concise and consumer-friendly disclosure form that lists the fees and key terms associated with checking accounts.” In particular, the two Senators want the CFPB to adopt the model checking account fee disclosure form created by the Pew Charitable Trusts and proposed by Pew to the CFPB in September. The Pew form was born out of an April 2011 report entitled Hidden Risks: The Case for Safe and Transparent Checking Accounts.
Durbin and Reed insisted that the form is necessary because of fees “hidden in the fine print or imposed with no notice at all” and suggested that banks have not provided “honest information” about fees. The Pew report, however, did not conclude that banks were failing to disclose information to consumers (although it does state that, with respect to overdraft programs, additional information about alternative options could have been, but was not always, provided). Rather, the key finding was that consumers were not reading the information provided by the banks. Indeed, the Pew report acknowledged that banks do provide fee information pursuant to the Truth in Savings Act. Pew just would like the disclosures required by TISA to be on a one-page, uniform and simple form in universal language used by all banks.
It is unfortunate that Senators Durbin and Reed felt compelled to demonize the banks and politicize the CFPB regulatory process. Pew’s approach to TISA disclosures might make business sense for some banks and benefit consumers. However, the appropriate mechanism for accomplishing that result is through the notice-and-comment procedures required for new regulations. We hope the CFPB will resist the Senators’ efforts to politicize its regulatory agenda.