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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- The Payment Plan Smokescreen
June 4, 2007Facing increasing scrutiny of the problems caused by payday lending, the industry trade group recently announced a new public relations campaign that claims to address the problem of loan flipping by requiring its lenders to offer borrowers an extended payment plan. However, this plan will not give borrowers a viable option for escaping the debt trap, and a description of the guidelines suggests lenders will offer the plan to borrowers in trouble only once per year despite the fact that the typical borrower has nine loans per year.
- Support HR 946
June 1, 2007CRL endorses Rep. Maloney's HR 946 as effective reform of bank overdraft practices.
- Comment: To Department of Defense on Military Lending Act
February 8, 2007Comments on Military Lending Act submitted to Department of Defense by Consumer Coalition on Feb. 5, 2007.
- Small Loan CRA Comment
February 2, 2007CRL Comment to the Federal Deposit Insurance Corporation on its proposed guidelines for affordable small-dollar loans.
- CRL Review of "Defining and Detecting Predatory Lending" by Donald P. Morgan, Federal Reserve Bank of NY, January 2007
January 23, 2007CRL critiques faulty research report by Don Morgan, which attempts to compare states with and without payday lending but misidentifies many of those states.
