Five Democratic senators have embarked on a mission to block banks from extending high-cost, short-term products that they say resemble "unsafe and unsound" payday loans. The legislators -- Richard Blumenthal of Connecticut, Sherrod Brown of Ohio, Richard Durbin of Illinois, Charles Schumer of New York, and Tom Udall of New Mexico -- penned a letter last week to the heads of the Federal Reserve, Federal Deposit Insurance Corp., and Office of the Comptroller of the Currency. In it, they pressed the regulators to prevent Wells Fargo, U.S. Bank, Fifth Third Bancorp, and Regions Financial from offering the payday-like loans and stop other banks from following suit. "We urge you to take meaningful regulatory action that ensures that no bank, regardless of its prudential regulator, structure loans in a way that traps its customers in a cycle of high cost debt," they wrote. The lawmakers also requested the OCC to scrap proposed guidance issued in June 2011 that addresses bank payday loans, saying that the financial industry would simply view the guidance as permission to move forward with widespread payday lending.
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