Senator urges Fed to oversee bank fee changes

(Reuters) - A U.S. senator on Sunday called on the Federal Reserve to ensure that banks do not penalize customers as they phase out free checking accounts and take other steps to increase revenue.

Senator Charles Schumer said there was a "trend across the banking industry" in which they are phasing out free checking accounts, and are charging maintenance fees unless minimum balances are maintained or direct deposits are made regularly.

Banks are seeking new revenue streams after the Fed imposed curbs on hefty fees some charged customers for overdrawn accounts or for switching banks, he said.

"This a radical departure from what consumers are used to and it is coming too fast for them to even realize what hit them," Schumer, a New York Democrat, said in a statement.

"Before banks impose new fees on something that has been free for years, they should at least give customers enough time and notice to get ready or even change banks if they want to," he added.

Schumer also released a letter to Fed Chairman Ben Bernanke calling on the agency to ensure that banks allow customers ample time to prepare for the new fees.

"It is essential that the Federal Reserve make sure that financial institutions provide clear and transparent guidance to consumers," Schumer wrote to Bernanke. He said it was "imperative that the Federal Reserve work to prevent banks from imposing additional, hidden fees and asking that he "pay special attention to financial institutions as they implement these adjustments."