San Francisco, CAWells Fargo, one of the nation's largest banks, recently said that it will lose $500 million in the second half of the year due to new laws that protect consumers from excessive overdraft fees.
One of the provisions in the recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act is a recommendation from the Federal Reserve to ban overdraft fees for ATM and debit card transactions unless consumers opt into an overdraft protection service, according to Reuters.
Wells Fargo says that the changes will cost them half a billion dollars through the end of the year.
"We currently estimate that the combination of these changes will reduce our 2010 fee revenue by approximately $225 million (after tax) in third quarter 2010 and $275 million in fourth quarter 2010," said Wells Fargo in a filing with the U.S. Securities and Exchange Commission, reports the news source.
With the new legislation consumers will have to actively select to be in what banks call "overdraft protection services." Previously, consumers had been automatically enrolled in such programs, which can charge large fees for overdrafts but allow transactions to still be processed.
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