Regulators

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At least two nationally chartered banks are offering their own version of payday loans, with high fees and short-term balloon payments similar to those that cause the typical payday borrower to become trapped in long-term debt.

Because the entire loan must be repaid in short order, borrowers are likely to have difficulty both retiring the loan and meeting their other obligations. As a result, these borrowers—like the typical customer of payday loan stores—will likely take out a series of back-to-back loans, staying indebted for a significant portion of the year.

The Office of the Comptroller of the Currency (OCC) is responsible for regulating these banks, and has so far failed to stop the predatory practice, making more Americans vulnerable to predatory short-term debt traps as it spreads.