U.S. banks, already under fire over credit-card fees and rate increases, are now facing a challenge on another front: the overdraft fees they charge customers who overdraw from their accounts.

Five U.S. Senate Democrats, including Senate Banking Committee Chairman Christopher Dodd (D., Conn.), on Monday introduced legislation that would put sharp restrictions on the fees bank can charge customers. Customers would have to opt-in to overdraft protection, and banks would be limited on the size and frequency of the fees they charge.

"Banks should not be trying to bolster their profits at the expense of their customers," Dodd said in a statement.

In September, some of the nation's largest banks including Bank of America Corp. (BAC), J.P. Morgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC), said they would roll back some overdraft fees. But the proposed legislation takes a tougher stance by requiring banks to impose overdraft fees that are "reasonable" and "proportional" to the cost of processing the overdraft, while placing limits on the number of fees that can be charged each month and year.

"The Dodd bill goes much further," said Eric Halperin, director of the Center for Responsible Lending. "It addresses both the costs and the number of overdraft fees."

None of the banks' recent announcements so far have meaningfully changed the number of times overdraft fees can be charged or reduced the overall size of the fees, he said.

Meanwhile, the Federal Reserve is also considering rules that could be finalized later this year that would, among other things, require customers to opt-in to overdraft protection.

U.S. lawmakers have expressed increasing frustration that banks and other financial firms, which benefited from the government's intervention in the credit markets last year, are pushing more aggressive consumer fees. A U.S. House panel is scheduled to consider legislation this week that would move up by two months strict new rules on credit cards.

"Taxpayers helped stabilize the financial services industry--big banks should not return the favor by slamming consumers with billions of dollars in overdraft fees," Sen. Sherrod Brown (D., Ohio) said in a statement.

A summary of the legislation said it would require customer consent for enrollment in any overdraft program, and would prohibit banks from discriminating against customers who opt out. Banks would be limited to charging only one overdraft fee a month, and no more than six a year, and the bill would mandate that fees be proportional to the cost of processing an overdraft.

Dodd and Brown introduced the legislation along with Sens. Jack Reed of Rhode Island, Charles Schumer of New York, and Oregon's Jeff Merkley.

-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com

(Jane J. Kim contributed to this article.)