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
