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Banks make billions on overdraft fees. Biden could end that

October 12, 2020. Summarized by summa-bot.

A person uses an automated teller machine (ATM) at a temporarily closed JPMorgan Chase & Co. bank branch in New York, U.S., on Friday, April 10, 2020. JPMorgan Chase is scheduled to release earnings figures on April 14. Photographer: Mark Kauzlarich/Bloomberg

The banking industry's $11 billion overdraft-fee gravy train could get derailed if Joe Biden wins the White House.

New York (CNN Business)The banking industry's $11 billion overdraft-fee gravy train could get derailed if Joe Biden wins the White House.

"Overdraft fees are one of the biggest risks to the banking industry under a Biden presidency," said Nathan Dean, senior analyst at Bloomberg Intelligence.

Cowen Washington Research Group warned clients last week that a Biden win will likely result in restrictions on how often banks can charge overdraft fees and other limitations.

Each year, banks haul in more than $11 billion worth of overdraft and related fees when customer accounts go negative, according to FDIC stats on banks with more than $1 billion of assets.

While overdraft fees pad the bottom lines of banks, they can burden customers, especially lower-income households.

Cowen thinks Biden-appointed regulators are likely to take several steps, including preventing banks from charging more than one overdraft fee per day, requiring lenders to process transactions in a way that minimizes overdraft fees and making banks waive overdraft fees if a customer is waiting for a deposit to clear.

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