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.
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- Letter to Bank Regulators: Stop Bank Payday Lending
February 22, 2012
Two hundred and fifty national, state and local organizations and individual advocates have asked bank regulators to stop banks from making predatory payday loans, which carry triple-digit annual interest rates of as much as 400 percent.
- Comments on NCUA's Notice of Proposed Rulemaking on Short-term, Small Amount Loans
July 6, 2010
Comments of the Center for Responsible Lending on the Notice of Proposed Rulemaking on Short-term, Small Amount Loans from National Credit Union Administration--12 CFR Part 701--RIN 3133-AD71. Submitted July 6, 2010.
- Mainstream banks making payday loans
February 24, 2010
National bank regulator, the OCC, must stop this trend before it takes off among more national banks, making millions vulnerable to predatory loans even in states that don't allow it from payday lending stores
- National Bank Regulator Enabled Overdraft Abuses
February 24, 2010
The OCC has acknowledged problems with bank overdraft systems but has allowed the banks they regulate to use them.
- Comment: Implementation of Military Lending Amendment
February 26, 2008
Comments on Implementation of Limitations on Terms of Consumer Credit Extended to Service Members and Dependents