Bank of America, Chase to lighten overdraft rules

— -- As Congress considers legislation to crack down on bank overdraft fees, the industry is starting to scale back some controversial practices.

Both banks say they're trying to help consumers struggling because of rising unemployment and stretched household budgets. "It was time to make this change to help customers," says Brian Moynihan, president of Bank of America's consumer and small-business banking business.

The moves, by the nation's largest banks, come amid growing consumer outcry about the industry's overdraft practices.

Rep. Carolyn Maloney, D-N.Y., has sponsored legislation to crack down on bank overdraft policies. Sen. Chris Dodd, D-Conn., plans to introduce his own bill to reform overdraft fees.

The new policies are likely to put pressure on other banks to review their overdraft fees. Richard Hunt, president of the Consumer Bankers Association, a trade group, says that banks are evaluating their policies "every hour of every day" in this downturn because they don't want customers to flee to competitors.

But critics question whether the changes are an attempt to stave off restrictions to a lucrative income stream. Amid the downturn, many banks have gotten more aggressive with overdraft fees. In 2009, financial institutions are expected to reap a record $38.5 billion from overdraft fees, according to Moebs Services, an economic research firm.