Regulators Warned Against Allowing Abusive Payday Lending
March 22nd, 2013
The Oblate JPIC Office joined nearly three hundred national organizations, state and local organizations, and concerned individuals in a letter against payday lending abusers organized by the Center for Responsible Lending.
According to the letter, “Direct deposit “advance” loans offered by a handful of banks, including Wells Fargo, US Bank, Fifth Third, Regions, Bank of Oklahoma and its related banking divisions, and Guaranty Bank, are structured and function just like loans from payday loan stores – carrying a high-cost combined with a short-term balloon repayment. Research has long shown that payday loans trap borrowers in a cycle of expensive long-term debt, causing serious financial harm to borrowers, including increased likelihood of bankruptcy, paying credit card debts and other bills late, delayed medical care, and loss of basic banking privileges because of repeated overdrafts. Payday lending has a particularly adverse impact on African Americans and Latinos, as a disproportionate share of payday borrowers come from communities of color. High cost, short-term balloon repayments, and the consequent series of repeat loans, have long been identified by regulators as features of predatory lending.