RADIO ADDRESS: Mainers living paycheck to paycheck ought to know that we have their back

Mainers work hard to heat their homes, put food on the table and make ends meet. The last thing we want to worry about is being taken advantage of by big banks through unfair practices.

Hi, this is Senator Mike Carpenter of Houlton. Thanks for tuning in.

In Augusta, we are working every day to level the playing field so Mainers have a fair shot at getting ahead. This session, I have sponsored a bill that prevents banks from hitting their customers with repeated and unnecessary overdraft fees by reordering their debit or checking transactions.

Many Mainers live paycheck to paycheck, and anyone who’s ever been in a tight spot financially knows that bills and expenses can sneak up on you, sometimes resulting in overdraft fees. It is not ideal but it happens. My bill would not stop banks from charging fees to customers who spend more money than they have, rather, it would require only that they do so fairly.

Banks have long provided overdraft protection as a courtesy to customers, allowing them to spend more than they have without bouncing a check or having a payment refused. But that “courtesy” comes at a cost: A 2016 study by the Pew Charitable Trusts found that more than 40 percent of banks “rearrange transactions in a manner that maximizes overdraft fees.”

For those living on the edge, it’s hard enough just to get by. The last thing they need is a big bank stacking the deck to hit them with fee after fee.

This process, known as “resequencing,” causes customers paying multiple overdraft fees that they would not have incurred if the bank had processed the transactions in the order they had been made. A frequent form of resequencing is “largest to smallest,” in which the most costly transactions are processed before smaller ones.

All I am asking for in this bill is a fair and natural sequencing of checks as they are presented.

For example, if I have $100 in my account and I write one check for $25, another for $50, and then a third for $200, with the expectation that I will receive my paycheck before the largest check processes (the third check), I would have the money to avoid an overdraft fee. However, the bank can rearrange the order of these checks and process them from largest ($200) to smallest ($25), hitting me with three overdraft fees that I wasn’t expecting.

I know that the folks in my district are tired of always having to look over their shoulder to avoid getting nickel and dimed from banks. This predatory practice I’m describing penalizes the most vulnerable among us who are doing their best to get by. It may seem obvious but research shows that individuals most likely to overdraft earn between $25,000 and $49,000. How can we expect hardworking Mainers to get out of poverty if they are slammed with fees at every turn?

Over the past three decades, banks across the country have doubled their revenue from services charges. In 2016 alone, U.S. banks raked in $6.4 billion in ATM and overdraft fees.

My bill is about basic consumer protection, and putting Maine people before banks. In Maine, we cannot make large banks and financial institutions change their ways because they are regulated by the federal government. But we can promote transparent banking practices in state banks and credit unions. At least it is a step in the right direction.

Between major advances in technology and the corporatization of businesses and banks, Mainers must be vigilant to avoid unfair practices. It’s not right and as lawmakers, we need to do more to protect Maine people. I will continue working to promote accountable business practices and lookout for Maine consumers all across the state.

This is Senator Mike Carpenter, thank you for listening.

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