In the wake of a regulatory crackdown against excessive bank fees, U.S. Bancorp became one of the first national banks to significantly reduce the fees it charges when customers overdraw their accounts.

The Minneapolis-based bank, Minnesota's second-largest by deposits, said Monday that it will slash overdraft charges by 70 percent on small transactions for customers who ask for overdraft protection. The policy applies to transactions with debit cards and automated teller machines, not checks.

The new arrangement, which takes effect in mid-August, comes amid increased scrutiny of overdraft fees. Last year, as the economy soured, congressional leaders and consumer groups attacked large banks for charging people $35 or more when they overdraw their accounts by small amounts.

Bowing to public pressure, the Federal Reserve in November adopted a new rule prohibiting banks from automatically enrolling customers in overdraft protection programs. The Fed required that banks first get customers' permission before charging them with overdraft fees on debit card and ATM transactions.

Bank of America was the first to respond. In March, the nation's largest bank said it would do away with overdraft protection altogether and stop allowing consumers to overdraw their accounts with one-time check and debit card transactions. It was widely thought that other banks would follow Bank of America's lead.

U.S. Bancorp is taking a different approach. It will keep overdraft protection in place but significantly lower the fees on small transactions.

In the past, the bank charged up to $37.50 per overdraft. Now, it will limit the fee to $10 for transactions of $20 or less and charge a $33 overdraft fee for transactions of $20 or more.

U.S. Bancorp's policy may appeal to customers who want overdraft protection for the occasional emergency but don't want to get dinged $40 for a cup of coffee, said Greg McBride, a senior financial analyst at Bankrate.com in North Palm Beach, Fla. "The person who only overdrafts their account occasionally is not going to mind paying a $10 fee from time to time," he said.

Chris Serres • 612-673-4308