WASHINGTON (CNNMoney.com) - Senate leaders on Monday unveiled their proposal to tackle overdraft fees, the penalties banks charge customers who spend more than they have in their accounts.
Echoing legislation offered in the House by Rep. Carolyn Maloney, D-N.Y., the Senate bill would require banks to ask customers before enrolling them in overdraft programs. In addition, like the House bill, it would limit the number of overdraft fees charged in a year.
Currently more than 75% of banks automatically sign customers up for overdraft programs, according to a study by the Federal Deposit Insurance Corp.
"At a time when many can afford it least, American consumers are being hit with hundreds of dollars in penalties for overdrawing on their account by just a few dollars," said Sen. Chris Dodd, D-Conn., chairman of the Banking Committee. "Banks should not be trying to bolster their profits at the expense of their customers."
But the Senate's bill goes further than the House bill in several areas.