To: All Member Banks and Others Concerned in the Third Federal Reserve District

Attention: Chief Executive Officer and Chief Compliance Officer



The Board of Governors of the Federal Reserve System and the other federal financial institution supervisory agencies have issued proposed guidance to assist insured depository institutions in the responsible disclosure and administration of overdraft protection services.

The proposed guidance identifies concerns raised by institutions, financial supervisors, and the public about the marketing, disclosure, and implementation of overdraft protection programs. To address these concerns, the proposed guidance: 1) seeks to ensure that financial institutions adopt adequate policies and procedures to address the credit, operational, and other risks associated with overdraft protection services; 2) alerts institutions offering these services to the need to comply with all applicable federal and state laws; and 3) sets forth examples of best practices that are currently observed in, or recommended by, the industry.

The proposal is being issued under the auspices of the Federal Financial Institutions Examination Council (FFIEC) by its member agencies: the Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; National Credit Union Administration; Office of the Comptroller of the Currency; and Office of Thrift Supervision.

The Board’s Federal Register notice containing the proposed guidance, published June 7, 2004, is available here (301 KB, 21 pages).

Date: Comments must be received within 60 days of publication in the Federal Register.

For Further Information: Minh-Duc T. Le, Senior Attorney, Daniel Lonergan, Counsel, or Elizabeth Eurgubian, Attorney, Division of Consumer and Community Affairs, (202) 452-3667; or William H. Tiernay, Supervisory Financial Analyst, Division of Bank Supervision and Regulation, (202) 452-2412. For users of Telecommunications Device for the Deaf (“TDD”) only, contact (202) 263-4869.