I believe the argument in favor of overdraft fees is that they are essentially extending a line of credit at the moment the customer needs it. As opposed to just denying the transaction outright. I had this happen to me once well over a decade ago, and I argued with my bank to make it so I would just be denied if it ever happened again. They acted shocked as if most people would rather go into debt than be denied.

There is Congressional testimony somewhere on this topic that provides their talking points. They were scolded without being actually punished, if I remember correctly.

I guess stopping you defaulting on loans so losing your car and things.