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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- Banks in California cannot deduct overdraft fees from Social Security benefits
December 14, 2007
CRL's amicus briefs in support of the plaintiff class in Miller v. Bank of America. CRL argues that California law concerning banks' set-off powers forbid banks from deducting overdraft fees from public benefit payments, including Social Security benefits, and this law is not preempted by the National Bank Act or regulations issued by the Office of Comptroller of the Currency. The trial court entered a verdict in favor of the plaintiff class; CRL participated in this case before the California Court of Appeals, First Appellate Division, and the California Supreme Court.
- Springing the Debt Trap-Exec Summary
December 13, 2007
Executive summary of Springing the Debt Trap - outlines what reforms states have tried, documents that none have worked except for the 36% rate cap.
- CRL Critique of “Payday Holiday: How Households Fare After Payday Credit Bans” by Donald P. Morgan and Michael R. Strain
December 10, 2007
A working paper by a staffer at the Fed Bank of NY is fundamentally flawed, offers no valid information, and is being used to justify policy that keeps low-wealth borrowers trapped in income-draining payday loans. The paper is not a Federal Reserve Bank report as a payday industry press release implies. Our critique exposes the fatal errors in the paper's methodology.
- Testimony--Overdraft Protection: Fair Practices for Consumers
July 11, 2007
Testimony of Eric Halperin Before the U.S. House Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit.
- The Payment Plan Smokescreen
June 4, 2007
Facing 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.