Back in the day, writing bad checks used to be a criminal offense. Now, it's a profit center. Banks make an eye-popping $17.5 billion a year by encouraging us to overdraw our checking accounts. Banks hold on to deposits and clear checks in a way that ensures the maximum number of bounces, regardless of when the checks were actually cashed. They let us use ATM and debit cards even when there's no money in our accounts. Then they charge us $34 a pop for the favor. Some banks even charge extra fees for every day an account is in the red, turning overdraft "protection" into a form of loansharking, with interest rates that would make Tony Soprano blush. Except when banks do it, it's all legal.
Tomorrow, the U.S. House Financial Services Committee will vote on a bill that might change some of this. Among other things, H.R. 946 would prohibit banks from manipulating check-clearing to enhance overdraft fees and require banks to warn customers that their accounts are overdrawn before allowing them to make a purchase with a debit card or make an ATM withdrawal. Seems sensible enough, but expect a major fight over this one, given the money involved. You can read more about overdraft abuses here.