Dodd offers protection from bank overdraft fees

WASHINGTON — The head of the Senate banking committee has proposed legislation to stop banks from automatically enrolling customers in overdraft programs and to protect consumers from excessive fees if they spend more than is in their checking accounts.

The measure introduced by Sen. Christopher Dodd, D-Conn., would give customers a choice in whether they want to participate in overdraft programs that charge fees for covering ATM withdrawals and debit card transactions. It would also require that fees be proportionate to the cost of processing the overdraft.

Several major banks, in anticipation of congressional action, have already said they will start letting people opt out of overdraft programs. Some have said they will lower their fees, which now are usually between $25 and $35, even when the overdraft is just a few dollars.