Long ago in a distant universe when I was a newbie banker banks paid an occasional overdraft. They did it because they valued the customer as a depositor, average balances were good and the account was established. In other words they did it because the customer had a good track records and because the bank was confident it would be repaid. There was a fee involved, but it was not a big number and certainly not the mainstay of solvency for the bank.
Today, some banks still "do it" that way, although the fee amount has increased over time. The Uniform Commercial Code supports the practice, and makes it clear that a bank retains a right to permit an overdraft and the party creating the overdraft remains responsible for it (in most cases other owners of the account are joined in that liability by contract).
How would it play out? The customer is liable.
That changes if the bank offers (voluntarily or not) and opt-out and the customer does, in fact, opt out.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8