As this National Consumer Law Center press release explains, seven major banks last month left the payday loan business in response to regulatory pressure and outcry from advocacy organizations. What effects that has on the payday loan market and consumers who particiapte in it remains to be seen. Here's a brief excerpt from NCLC's release:
The seven banks that have exited the payday loan business this month have an opportunity to show leadership in developing affordable small dollar credit options for consumers with less than pristine credit, according to advocates at the National Consumer Law Center (NCLC). “Banks have thankfully exited the payday loan business,” said Lauren Saunders, managing attorney of the National Consumer Law Center in Washington. “I am confident that banks that were making 300% so-called deposit advance products can develop better small dollar credit options and non-credit options, even for consumers who do not qualify for prime lines of credit.” In the past week, in response to regulatory pressure and public outrage, Wells Fargo, U.S. Bank, Fifth Third Bank, Regions Bank, Bank of Oklahoma and its affiliates, and Guaranty Bank all announced that they were halting their deposit advance programs that made short term loans at rates near or above 300% APR. Many of the banks said they are working on other products.
