A slew of new rules coming down the pike could take the air out of bank payday offerings, known as deposit-advance loans. Proposals from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are the agencies' "way of killing the product," according to bank industry attorney Jeremy Rosenblum of Ballard Spahr. Among other directives, the proposals would require banks to assess borrowers' repayment ability and would mandate "cooling off" periods between loans to the same borrower. Restrictions like these, taken together, would make it highly challenging for banks to continue providing deposit-advance products. Meanwhile, the Federal Reserve -- which was criticized for separating itself from the OCC and FDIC policy recommendations -- said only that banks should evaluate the potential risks tied to the loans, including the potential for consumer harm. "We wish they would have come out as explicitly as the FDIC and the OCC," laments Kathleen Day of the Center for Responsible Lending. "But this is pretty good. This basically, in a more roundabout way, says much the same thing."
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