#QuickTakes: John Cohron

John Cohron, CEO of JMFA, joins BankBeat Publisher Tom Bengtson to discuss the role of overdraft programs in the current environment, as some bigger banks look to eliminate or reduce them and some Democrat legislators turn increased scrutiny to their usage.

Senators Elizabeth Warren (D-Mass.) and Cory Booker (D-N.J.) have recently reintroduced legislation intended to “crack down on exploitative overdraft fees” after Warren sparred with JP Morgan Chase CEO Jamie Dimon over the bank’s overdraft practices in a May hearing. An assortment of larger national and regional banks have cut back on or eliminated overdraft fees in recent months, leading some community bankers to reconsider the practice.

Complete elimination would be a mistake, Cohron argued, laying out how some consumers can rely on overdrafts to help them through difficult situations.

“When managed correctly, the service doesn’t take away from the customer relationship — it enhances it,” Cohron said. “When customers have difficulty managing their checking account, and they don’t have access to a savings account or a line of credit to cover expenses, a fully disclosed overdraft safety net can help them avoid those long-term consequences” such as lowered credit scores or difficulty obtaining insurance.