Wells Fargo, US Bank, and Fifth Third Discontinue Payday Loan Products
Center for Responsible Lending
January 17, 2014
Updated at 5:05 p.m.
More good news: Wells Fargo Bank, US Bank and Fifth Third Bank announced today that they will discontinue their 225-300% annualized-interest-rate payday loan products. The announcements follow regulatory guidance finalized late last year by the Office of the Comptroller of the Currency (OCC), which supervises Wells Fargo and US Bank, and by the FDIC. The guidance advises banks under those agencies’ supervision to ensure they are not making small-dollar loans their customers cannot afford to repay. The Federal Reserve, which supervises Fifth Third, also issued a supervisory statement last year emphasizing the significant consumer risks bank payday lending poses.
This news follows the announcement from Regions Bank, also supervised by the Federal Reserve, earlier this week that it will discontinue its payday loan product.
These four banks were the largest of a handful of banks making payday loans. Banks have touted the loans as a quick fix to a financial shortfall, but data have consistently shown that, like other payday loans, the banks’ products trap customers in extended cycles of high-cost debt. A 2013 Consumer Financial Protection Bureau report found that banks’ payday loans keep customers in triple-digit debt during an average of seven months out of the year.
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About the Center for Responsible Lending
The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation's largest community development financial institutions.