While you might dismiss overdrafts as a simple personal-responsibility issue, Fusaro found that 57 percent of account holders in its sample had overdrawn at some point, meaning that most of us are irresponsible.

Salmon calls this a “poverty issue,” which is red meat for a certain kind of commenter (bring it on!). But he’s certainly right. Fusaro found that 20 percent of account holders used overdraft protection for personal loans. Well-off folks aren’t doing that. Basically, these are payday loans that make that loathsome industry’s interest rates look tiny.

Let’s not forget about credit cards. When my wife and I got married, I put her on my bank accounts. She accidentally used my Bank of America credit card instead of my BofA check card and racked up $33 overdraft fees. Now, fine, it’s our mistake and we’re in a better position to take those hits than many. I’ll take my lumps. But I’m old enough to remember when credit cards got refused when you reached your credit limit. Any wonder why they don’t now?

That’s a key answer to this big problem. The default setting on all accounts, including credit cards, ought to be to decline overdrafts (this wouldn’t affect bad checks, of course, which are more problematic). Consumers should have to consciously opt in to “overdraft protection.” That’s fair, right? Defining and regulating “overdraft protection” as “loans” ought to help, too.

Don’t think the banks will go along without a massive fight. This is a $38 billion a year business that’s almost pure profit.

The new press attention to this practice is a welcome development indeed. Keep it up.

UPDATE:

After posting this, I saw the prolific Salmon had added some excellent thoughts on the subject, dropping a little behavioral economics on the laissez-faire crowd. Here’s a taste:

…I wrote that the banks “should be stopped”. In response, Fernando says that “we need to keep holding people responsible” and that “some people just need to manage themselves better”. But here’s the difference: stopping banks is, conceptually, possible. But the $38 billion in annual overdraft fees are clear proof that Fernando’s “people” just aren’t going to magically start managing their finances in an optimal manner.

Empirically speaking, it’s clear that the 20% of checking account holders who pay, on average, $1,374 in annual overdraft fees apiece are precisely the people least able to afford them. They’re probably also the 20% of people who, for whatever reason, find it very difficult to manage their personal finances. Not everybody is as numerate and sophisticated as Vincent Fernando — a lot of people can’t even manage simple addition and subtraction. Is it fair for the highly-sophisticated and numerate executives at international banking giants like Bank of America to take advantage of that financial illiteracy in order to line their own pockets with multi-million-dollar paychecks? Or should people be able to trust their banks implicitly?

Can’t put it any better than that. Go read the whole thing.

Ryan Chittum , a former Wall Street Journal reporter, is deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.