Reclassification could lead to more stringent oversight and prevent predatory practices involving ISAs, said Whitney Barkley-Denney, senior policy counsel at the Center for Responsible Lending.
"If you give money to someone with expectations that you will pay them back," she said, "that's a loan."
“It's great that a lot of large financial institutions are making a move away from fee-based overdraft for their customers,” says Peter Smith, a senior researcher for the left-leaning Center for Responsible Lending who’s focused on overdraft practices.
But Smith doesn’t see a few large banks changing their fees as sufficient. Especially given that nearly 18% of consumers with a bank account reported overdrafting in December, according to a survey from Morning Consult.
“It really does shift the onus on the president to make his plans clear sooner rather than later,” said Whitney Barkley-Denney, a senior policy counsel at the Center for Responsible Lending.
“There’s a time crunch here,” Barkley-Denney said. “People need to make plans for how they are going to handle this loan debt going forward.”
“Once again, Americans who work, pay taxes and tried to do the right thing have been used as cash cows to enrich unaccountable investors and corporate executives,” says Jaylon Herbin, student loan outreach and policy manager at CRL. “The true victims of these abusive loan schemes deserve to have this government-imposed weight removed from their shoulders.”
“They are marketing very heavily to an audience that is younger, that might not just have as much experience on how to use credit and what credit implications are or what it means to have multiple loans at one time,” Marisabel Torres, the California policy director of the Center for Responsible Lending, told SFGATE.
About 75% of these business fees are being generated from more than 10 loans a year per person. It's really a debt trap by design. Payday lenders succeed by rolling over loans and getting more loans.
A new study found that even creditworthy shoppers may be unable to find traditional mortgages. But the arrangements often lack typical consumer protections.
“We have this distorted cross-subsidy where the biggest revenue on checking accounts is coming from the people with the least money, and they’re subsidizing the checking accounts of those with more money,” said Mike Calhoun, president of the Center for Responsible Lending.
"Overdraft fees kick people when they are down," Nadine Chabrier, policy and litigation counsel for the Center for Responsible Lending (CRL), said. "Their costs are borne by financially vulnerable consumers. These fees disproportionately harm Black and Latino Americans with a bank account. Overdraft fees are also one of the most common reasons people lose their bank accounts.
