Industrial loan companies (ILCs) or industrial banks (IBs) (together, “ ILCs”) typically enjoy the privileges of traditional banks but pose two significant risk factors unique to ILCs: They are not subject to the Federal Reserve’s supervision, which occurs at the consolidated level (i.e., the ILC’s parent company, the ILC, and their affiliates); and They permit the intermingling of commercial and financial activity, prohibited for traditional banks. In light of these concerns, the FDIC did not permit any new ILCs for over a decade, until March of this year, when it approved two. Now, the FDIC...
Payday, car-title, and similar high-cost loans, typically with interest rates of 100% APR and higher, trap people in crippling long-term debt. CRL advocates for regulators to require lenders to verify borrowers can afford to repay a loan before that loan is issued. CRL also advocates for interest rate caps of no higher than 36% APR and for enforcement of current usury laws.
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The Center for Responsible Lending (CRL) joined with a coalition of civil rights, community, consumer, and faith organizations in two public comment letters warning the Federal Deposit Insurance Corporation (FDIC) that its proposed rule for chartering additional underregulated Industrial Loan Companies (ILCs) would expand predatory, high-interest lending. The plan would grant the predominantly online non-bank companies that are approved for an ILC with preemptory powers over state consumer protection laws, including interest rate caps. Download the long comment letter Download the short...
Americans of all partisan identities,and across all regions of the United States,strongly support enacting new consumer protections on high-interest lending during the coronavirus crisis. Americans are highly supportive of prohibiting all high-interest loans during the crisis and of capping interest rates for consumer loans, according to a new bipartisan poll from Lake Research Partners and Chesapeake Beach Consulting. Download the poll results. (PDF)
Payday lenders see chaos and crisis as a profit opportunity—this pandemic is no different. In many states, payday lenders are working to be declared essential businesses so that they can continue to prey on families even as financial insecurity increases. However, these loans that trap people in a cycle of debt are never essential--and in a crisis they are even more harmful. Download the one-pager. (PDF)
On March 26, 2020, five federal agencies (the OCC, FDIC, Federal Reserve, CFPB, and National Credit Union Administration (NCUA)) issued brief joint guidance to “specifically encourage” financial institutions to offer “responsible small-dollar loans” to both consumers and small businesses during the COVID-19 crisis. This guidance contains troubling language that could be read to permit banks to make payday loans. Banks should not read it that way and should stay out of the business of payday lending.
A diverse coalition of community organizations signed on to this letter to Congress urging them to protect Americans from price gouging during this unprecedented COVID-19 crisis, by enacting a 36% APR cap on all loans. Congress should amend the Military Lending Act (MLA) to extend to ALL consumers the credit protections provided to members of the Armed Forces and their dependents throughout the duration of the COVID-19 emergency.
New Jersey has long been a national leader in the fight against predatory lending which strips wealth from communities. Strong state usury laws protecting New Jerseyans from payday lending in the state save New Jerseyans over $193 million annually. New Jerseyans continue to overwhelmingly support a rate cap on payday and consumer installment loans and want to ensure the strong state laws preventing abusive practices by lenders cannot be evaded.
Morning Consult conducted a survey, commissioned by Center for Responsible Lending, of approximately 10,000 registered voters. The poll is presented as a short Powerpoint-style slide deck with key takeaways, charts, and maps. This poll presentation is linked to above and here . Key findings include: An overwhelming majority (82%) of those who have taken out payday loans support an annual interest rate cap on payday loans of 36%. Sixty-four (64%) of those who have taken out a payday loan “strongly support” a rate cap. Those who have taken out a payday loan are the greatest supporters of rate...
Georgia has long been a national leader in the fight against predatory lending, imposing strict usury limits on small loans. In 2004, Georgia legislators closed loopholes used by payday lenders to charge triple-digit interest rates; they reaffirmed their commitment to keeping payday lending out by increasing fines and criminal penalties for making small loans at illegal interest rates. These laws save Georgians over $284 million annually. Georgians are also concerned about other high-cost loans like car-title lending, in which lenders charge annual interest rates of up to 300%. A 2019 poll...
In South Carolina, payday and car-title lenders charge working families 395% interest, creating a debt trap that can keep South Carolina families in a cycle of debt for years. In fact, these lenders drain more than $245 million from South Carolinians, primarily from low-income families and communities of color. South Carolinians want reform that has been proven to stop the debt trap—a true rate cap on payday loans that repeals the ability of payday lenders to charge the high rates and restores a maximum limit of 36%.