FDIC Federal Register Citations

Kansas State Bank 


From: John Musselman [mailto:jmusselman@kansasstatebank.com] 
Sent: Wednesday, June 23, 2004 5:22 PM
To: Comments
Subject: Joint Agency Notice - Overdraft Protection Programs  

Dear Sirs: I have a few additional thoughts that were not included in my original comment email.

1) With regard to the overall proposal, I clearly understand that consumer groups may not like to pay fees associated with the payment of checks into an overdraft condition, but the consumer wants and appreciates having the checks paid. They only worry when the possibility of nonpayment is an issue. If regulatory bodies choose to eliminate the incentive for the industry to pay checks then the alternative is to return the items. If this were to occur the consumer would continue to pay higher fees for merchant collection efforts and be subject to negative acceptance listing by these same merchants. 

2) Trying to structure the payment order of all possible debits to an account is extremely difficult. Trying to disclose such information is nearly impossible when you consider the judgement bankers have added for years in trying to pay critical household expense checks ahead of non-essential checks. If we are regulated to disclose which debits will be paid in which order, then we loose the ability to help the customer as much as possible in order to minimize credit damage resulting from bad check returns. Additionally, I believe that any attempt to regulate the order in which a bank chooses to process debits for payment against an account balance is contrary to current legal precedent. 

3) Insufficient funds fees are and byproduct of an accountholders actions. Yes, we state that we will grant the privilege of paying an account overdrawn to a certain balance, but the fee structure for an account does not include consideration for insufficient check writing any more than consideration for wire transfer requests or stop payment orders. This is an al la carte item and should continus to be priced on its own merit. Any customer opening an account will state that they won't have any insufficient check fees. They don't intend to write bad checks but sometimes that's what happens. Additional disclosures to the customer about something they don't believe will happen fall are discarded without second thought.

4) Since we began our overdraft program in April of 2002, consumer complaints about returned checks have all but disappeared. Any customer that doesn't wnat their checks paid may decline the service. Our experience is that price doesn't matter as long as the check is paid. Incidently, we offer protection via credit card advance or sweep from another related account and acceptance of those low cost programs is minimal. 

Thank you for your additional consideration.

John Musselman
Kansas State Bank 
1010 Westloop
Manhattan Ks 66502