You’re creating a perverse incentive where people could actually profit by overdrawing. Assuming there was protection from “gaming the system,” you are still drastically altering the incentive scheme (in this case the strong disincentive). The reason you have only overdrawn on occasion is because you knew there were strong consequences (at least $25.00). If this is reduced to little or no negative consequence, you are that much less likely to think about overdrawing. Example: you are at the grocery store and your total comes to $80 and you think you have somewhere between $75 and $100 in your checking account. If you know that you could be on the hook for at least $25, you are likely to put back $5 worth of items to ensure you don’t overdraw. If the maximum penalty you face by overdrawing is $5, you probably wont even think twice. Multiply this effect out and you will see a dramatic increase in overdrafts. In your type of “loss share arrangement, the pool of funds would have to grow quickly to keep up will all the overdrafts. Soon enough your are right back where you started.

Your final two sentences are really rather obtuse. That $45 is going “back into the Economy” whether it goes to the bank or the grocery store. Both places employ people and pay taxes. Therefore the cash is distributed to individuals in the economy. This idea that banks are somehow this shadow entity that steals and stockpiles cash bewilders me. I work for a bank. your fees etc pay my wage (and no I am not overpaid) which I spend on gas, insurance, rent, and the same grocery stores you do. Meanwhile they allow the bank to provide financial services so that grocery store can take your check instead of you having to carry all of your assets wherever you go :)

Truth… It’s fun :)