The Massachusetts Division of Banking has set the maximum fee for dishonored checks (deposit returned items) at $6.84, which was the median cost for a sample of state chartered financial institutions to process deposit returned items. This maximum fee goes into effect on June 1.
Previously, the maximum fee was $5.71 per item.
Massachusetts State Law authorizes the commissioner of banks to annually establish a reasonable fee that compensates a bank or credit union for the direct cost incurred in processing deposit return items.
The fee was determined from cost data of 74 state chartered banks and credit unions. The sample included 39 banks and 35 credit unions.
The cost of processing a deposit return item ranged from $1.21 to $22.65 per item. The average cost for banks and credit unions were $6.97 and $8.95, respectively.
Based upon the survey, half of the banks and credit unions will not be able to recoup their cost for processing a deposit return item. That is just wrong.
Banks and credit unions should have the freedom to set their prices, not have them dictated by the state. Price controls have the unintended consequence of distorting economic decisions.
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Does this imply that CFPB could impose a ceiling on bounced checks that is similar ( just the cost to the bank)?
ReplyDeleteCould they impose such a cap even on opt in programs like "courtesy pay"?