We have blogged recently (here and here) about the role some of the world's largest banks play in facilitating the payday loan industry. The latter article explained that JP Morgan was in the process of re-thinking its practices. Yesterday, JP Morgan announced its new policies, as explained in this article by Jessica Silver-Greenberg. Here's an excerpt:
JP Morgan Chase will make changes to protect consumers who have borrowed money from a
rising power on the Internet — payday lenders offering short-term loans
with interest rates that can exceed 500 percent. JPMorgan, the nation’s largest bank by assets, will give customers
whose bank accounts are tapped by the online payday lenders more power
to halt withdrawals and close their accounts. Under changes to be unveiled on Wednesday, JPMorgan will also limit
the fees it charges customers when the withdrawals set off penalties for
returned payments or insufficient funds. The policy shift is playing out as the nation’s biggest lenders face
heightened scrutiny from federal and state regulators for enabling
online payday lenders to thwart state law. With 15 states banning payday
loans, a growing number of the lenders have set up online operations in
more hospitable states or foreign locales like Belize, Malta and the
West Indies to more nimbly dodge statewide caps on interest rates. Bank of America and Wells Fargo said that their policies on payday loans remained unchanged.
