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***By Electronic Delivery***

July 30, 2008

+-----------------------------------+-----------------------------------+
| Jennifer J. Johnson               | Regulation Comments               |
|                                   |                                   |
| Secretary                         | Chief Counsel's Office            |
|                                   |                                   |
| Board of Governors of the Federal | Office of Thrift Supervision      |
| Reserve System                    |                                   |
|                                   | 1700 G Street, NW.,               |
| 20th St. and Constitution Avenue, |                                   |
| NW.                               | Washington, DC 20552\             |
|                                   | ATTN: OTS--2008--0004             |
| Washington, DC 20551              |                                   |
|                                   |                                   |
| <                                 |                                   |
| regs.comments@federalreserve.gov> |                                   |
+-----------------------------------+-----------------------------------+

Re: FRB Docket No. R--1314; OTS Docket No. OTS--2008--0004;\
Unfair or Deceptive Acts or Practices; 73 *Federal Register* 28904

The North Dakota Bankers Association ("NDBA") appreciates this
opportunity to comment upon the overdraft fee practices which the Board
of Governors and Office of Thrift Supervision are proposing to classify
as unfair and deceptive ("the proposed UDAP rules"). NDBA is a state
trade association for commercial banks and federal savings banks. With
only a handful of exceptions, NDBA members are "small" institutions.
NDBA members operate more than 300 offices throughout the state of North
Dakota. NDBA is deeply concerned that the adoption of the proposed UDAP
rules will have unintended, unfavorable consequences for our member
banks and North Dakota consumers as well.

*Charging Overdraft Accommodation Fees Is Not Unfair And Deceptive
Conduct*

Frankly, we do not see accommodations by banks to cover customer
overdrafts as being unfair or deceptive and strongly object to any
regulatory classification to that effect. We see discretionary overdraft
accommodation as benefitting customers and believe our customers feel
the same way. In North Dakota, writing a checks or making an electronic
funds transfer when "there are not sufficient funds in or credit with
the bank, banker, or depository to meet the check, draft, electronic
funds transfer, or order in full upon its authorized presentation" is a
crime. N.D.C.C. 6-08-16. A bank which covers its customer's overdraft is
following the payment order of its customer and saving the customer from
potentially serious adverse consequences that attach to the dishonor or
rejection of a transaction that overdraws the customer's account.

Customers are not naïve. Each customer knows s/he, not the bank, is
responsible for managing accounts so balances cover the payment orders
the customer has made. Presently, customers understand that the bank may
dishonor or reject a transaction which overdraws the customer's account.
Customers also know that a bank will charge a fee when there is an
overdraft and have, by their embrace of overdraft accommodation service
programs, evidenced their strong preference for paying a fee when an
overdraft is accommodated, than for paying a fee (and more likely,
multiple fees) and suffering the consequences that occur when a check is
dishonored or a debit transaction is rejected.

122 E Main Avenue Suite 201 PO Box 1438 Bismarck, ND 58502-1438 Phone:
701.223.5303 Fax: 701.258.0218 [www.ndba.com](http://www.ndba.com/)

FRB Docket No. R--1314; OTS Docket No. OTS--2008--0004;\
July 30, 2008

Page Two

The proposed rules appear to be heavily influenced by suggestions that
overdraft accommodation programs must be unfair to overdrawn consumers
because they are profitable for banks and must be founded on deception
because rational consumers wouldn't overdraw their accounts if they
realized the expense of that conduct. We hold a contrasting view. We
think bank programs to accommodate customers who have overdrawn their
accounts is a service that has value as demonstrated by customer usage
and that labeling overdraft accommodation fees as being unfair and
deceptive (unless they are assessed only after a formal opt out notice
as provided by a maze of complex regulations) will make many North
Dakota banks conclude accommodating a customer causes more trouble than
it is worth. With the adoption of the proposed rules, we anticipate that
many of our members will forgo discretionary accommodation in favor of
dishonoring items and rejecting transactions that overdraw accounts.
Frankly, we wonder what the regulatory response will be to customers'
resulting frustrations and complaints that they are being
"discriminated" against because the bank no longer accommodates their
overdrafts.

*Formal Opt Out Provisions Are Not Necessary And Will Confuse Customers*

We are also deeply concerned that the formalized "opt out" approach (and
related notice requirements and safe harbor provisions in the proposed
amendments to Regulation DD) will confuse customers about the
discretionary nature of bank overdraft accommodation programs and
instead cause those customers who do not choose to opt out to conclude
that the bank is contractually obligated to accommodate overdrafts, when
that is not the case. Under current practice, banks advise customers
about account terms and fees, including overdraft fees, when an account
is opened. Customers know that all that is required to avoid overdraft
fees is not to make payment orders that exceed the balance in the
account. In North Dakota the great majority of customers decline
overdraft accommodation and overdraft fees because they don't overdraw
their accounts either by checks or debit transactions. The idea that a
formal opt out notice is required to advise customers about overdraft
fees is simply misguided.

Customers are and must remain responsible for the management of their
own accounts. Customers know that overdrawing an account, even
unintentionally, is conduct that results in the assessment of fees,
whether the transaction is accommodated or rejected. A customer who
regularly overdraws an account has chosen to pay those fees; they do not
require repeated notice that they can "opt out" by not engaging in the
transaction that will overdraw the account. A customer who chooses not
to participate in an overdraft accommodation programs or to pay the
associated fees makes that choice by tracking their account balances and
not overdrawing an account, either by checks or debit transactions.

*Proposals for Partial Opt Out Are Not Workable*

The proposals to allow customers to direct a bank to pay certain types
of transactions, but to reject others are not workable. A system of
"partial opt outs" will also be highly confusing to customers.

FRB Docket No. R--1314; OTS Docket No. OTS--2008--0004;\
July 30, 2008

Page Three

It is quite clear that one factor underlying the partial opt out
proposal is the hypotheses that it debit cards and vendor use of ACH as
payment mechanisms have made it "too" easy for customers to make spur of
the moment, unnecessary purchases and that customers can be made to be
more responsible consumers by having them elect to have POS transactions
or ACH

transactions rejected if the purchase transaction will overdraw the
customer's account. Shifting responsibility for a customer's behavior
from the customer to the banks under the guise of UDAP regulations is
not an appropriate bank regulatory purpose, no matter how well intended.

It appears that the proposals for partial opt out assume a level of
technological capability that may not exist for many North Dakota banks.
Frankly, we are not certain that all banks will have the ability to
identify and distinguish between and among POS debit transactions, ACH
transactions and transactions in which a customer has used a debit card
to make recurring payment arrangements for such things as utility bills.
Even if banks are able to make these distinctions and even with the use
of the prescribed notice, there is a substantial risk that a bank's
customer will not recognize that a partial opt out covers all debit card
transactions, not merely those that are POS transactions with the
consequence that important recurring obligations could go unpaid. It
might be argued that bankers can explain these details to their
customers and help them to make an appropriate opt out choice. However,
the safe harbors apply only if banks use the prescribed notices.
Accordingly, banks would be unwise and exposing themselves to legal
liability if they go beyond the notices in order to try to give more
extensive explanations to customers.

The partial opt out provisions are also very likely to confuse the
customer regarding the nature of the entire overdraft accommodation
process because it suggests that the customer has contractual rights
when the customer, in fact, does not have those rights. The likelihood
of customer confusion over the opt out rights is something that must be
tested before the opt out proposals are adopted.

Notwithstanding the pressure for the Board and OTS to adopt UDAP rules
as the "credit crisis" has unfolded, overdraft accommodation practices
that are industry standard, comply with regulatory guidance, and have
been well received by customers were not and are not unfair or
deceptive. Banks have not injured their customers by accommodating and
paying overdrafts, customers are neither tricked nor forced to
participate in accommodation programs and may avoid participation
entirely by exercising normal care as described in Federal Reserve
consumer publications.

As the Board and OTS evaluate the proposed rules, we strongly urge
restraint and consideration of the millions and millions of consumers
who have benefitted because their banks have accommodated their
overdrafts and shielded them from consequences ranging from
embarrassment to criminal prosecution. The proposed rules for overdraft
accommodation programs are overly complex, operationally impractical and
too heavy handed. We urge their withdrawal.

FRB Docket No. R--1314; OTS Docket No. OTS--2008--0004;\
July 30, 2008

Page Four

That notwithstanding, we do believe bank customers should be fully aware
of their rights and responsibilities regarding funds availability and
all aspects of their various banking transactions; however, rather than
casting financial institutions as "villians" and overdraft accommodation
as "unfair and deceptive" the better approach to use existing agency
authority under the Expedited Funds Availability Act, Regulation CC, the
Electronic Funds Transfer Act and Regulation E to improve customer
awareness of the transaction clearing process.

Thank you very much for your consideration of our comments.

Sincerely Yours,

NORTH DAKOTA BANKERS ASSOCIATION

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Rick Clayburgh Marilyn Foss

President and CEO General Counsel