CRL in the News
California Gov. Jerry Brown signed three bills Sunday that could have a sizable impact on banks and other lenders in the nation’s most populous state.
As Congress struggles over how best to regulate fintech companies, credit unions on Friday renewed their call for a regulatory regime that is as strict as the one they must follow.
The emergence of new financial products should not lead to a loosening of consumer protections, Scott Astrada, director of federal Advocacy at the Center for Responsible Lending, told the subcommittee.
Uncertainty around the legal and regulatory status of loans made through bank partnerships with financial technology firms is an obstacle to innovation and greater credit availability and should be cleared up legislatively, a panel of U.S. House lawmakers heard Friday.
Consumer advocates for years have decried payday loans as a costly way to borrow and one that keeps people trapped in a cycle of high-interest debt. The howls of protest could grow louder now than a major bank has stepped forward with a similar product.
Listen to an interview with CRL's Rebecca Borné on the Money Life podcast discussing U.S. Bank’s new dangerous payday loan alternative product, Simple Loan.
Consumer advocates for years have decried payday loans as a costly way to borrow and one that keeps people trapped in a cycle of high-interest debt. The howls of protest could grow louder now than a major bank has stepped forward with a similar product.
U.S. Bank, one of the country’s biggest banks, has again begun offering customers small, high-cost loans, saying the loans now have safeguards to help keep borrowers from getting in over their heads.
The loans, between $100 and $1,000, are meant to help customers deal with unexpected expenses, like a car repair or a medical bill, said Lynn Heitman, executive vice president of U.S. Bank consumer banking sales and support. But the fees equate to an annual interest rate of about 70 percent.
A provision of the 2010 Dodd-Frank law aimed at fair lending for minority and women-owned small businesses is unlikely to move forward, according to several people with knowledge of the matter.
Banks and other small-business lenders have sometimes balked at the requirement the law sets for them to collect information.
Yet Scott Astrada, director of federal advocacy for the Center for Responsible Lending, argued that fulfilling the rule wouldn’t be burdensome to banks and nonbank lenders, which he says already collect much of the information.
Minneapolis-based U.S. Bank last week began offering a small-dollar loan product called Simple Loan that charges interest rates ranging from more than 70 percent to almost 88 percent.
"This type of product isn't a safe alternative to a payday loan," Rebecca Borne, senior policy counsel at the center, said in a statement. "And we reject the notion that bank loans as high as 70 [percent] to 88 percent [annual percentage rate] will drive out higher-priced credit by nonbanks."
If you’ve defaulted on a federal student loan, beware: The federal government can take up to 15 percent of your Social Security benefit.