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Bloomberg targets overdraft fees, broader CFPB authority in proposal

Presidential candidate Mike Bloomberg unveiled a sweeping set of financial reform proposals that includes tougher regulation on overdraft fees and broader authority for the Consumer Financial Protection Bureau.

Bloomberg, who is running for the Democratic candidacy, embraced some progressive policies that have been championed by other candidates such as Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Sanders, I-Vt. For example, Bloomberg called for a financial transactions tax and for banking services to be provided through the U.S. Postal Service. Bloomberg's proposal envisions a 0.1% tax on all financial transactions that would be phased in gradually.

Bloomberg also envisions changes for overdraft fees, calling them "an unreasonable penalty on being poor." His proposal would treat frequent overdrafts as a form of credit and would prohibit reordering transactions.

The progressive tone of Bloomberg's proposal "underscores the populist shift in the Democratic party and the heightened potential for significant policy shifts," wrote Isaac Boltansky, an analyst for Compass Point Research & Trading in a Feb. 18 note. Boltansky called the overdraft fee proposal "particularly noteworthy" and suggested that a Democrat winning the White House would likely result in overdraft fee reform.

On the CFPB, Bloomberg's plan calls for the agency to be given jurisdiction over auto lending and credit reporting. He also calls for the restoration of the bureau's rules on payday lending and mandatory arbitration.