Policy & Legislation
Battles rage across the country between the payday lending industry and coalitions of citizens groups who are increasingly insisting they will not accept 400 percent interest lending. Fifteen states plus the District of Columbia have outlawed triple-digit interest, and two states rejected them in ballot measures last November – Ohio and Arizona, which becomes the sixteenth state to put a stop to the predation through an interest rate cap as of July 2010.
Other than protecting military families with a 36% APR cap on small predatory loans, Congress has not yet moved to expand reforms across the country, and some big national banks are beginning to get into the business with loans that are virtually indistinguishable from storefront payday loans.
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- Renewed Call for Federal Action Against Bank Payday Loans
March 13, 2013
Federal regulators should take immediate action to stop unaffordable, high-cost payday lending by banks. That is the key message from more than 260 groups and individuals in a letter to the heads of the Federal Reserve Board, the FDIC, the OCC and the CFPB. This is a follow-up letter from the same request that was submitted in a similar letter the previous year. The groups say, “We are concerned that a year has passed without decisive regulatory action, so we write to renew our call.”
- How Payday Lending by Banks Violates Safety & Soundness Standards
February 28, 2013
Banks that do payday lending (a.k.a. "Direct Deposit Advances") are engaging in risky behavior. This legal brief offers legal precedents and shows why banking regulators responsible for monitoring banks' safety and soundness should not allow payday lending by depository institutions.
- New York Times Article on Banks Aiding Payday Loans: There's Even More to the Story
February 26, 2013
On February 23, the New York Times published an article describing how some banks enable Internet payday lending. In this brief, CRL provides additional legal context to supplement that article. Bottom line: We need to continue passing state laws that provide strong enforcement tools, and federal regulators need to use their full authority to stop predatory payday loans.
- U.S. Senators ask Regulators to Stop Bank Payday Lending
January 7, 2013
Five U.S. Senators have asked the OCC, the FDIC and the Federal Reserve to stop the banks under their respective jurisdictions from making predatory payday loans. At least four big banks have started making the triple-digit interest loans, which are virtually identical to the predatory payday loans that trap borrowers in long-term, high-cost harmful debt.
- CRL Comments on Proposed Rules for NCUA Payday Alternatives Loan Program
November 30, 2012
CRL urges the NCUA to structure their Payday Alternatives Loan (PAL) program to reflect the broad range of alternatives, to prevent the program from operating like a series of high-cost payday loans and to prevent credit unions from engaging in payday lending outside of the PAL program.