Payday lending called into question

May 3, 2013

Under new guidelines proposed by federal financial institutions, ‘payday loan’ vendors and national banks offering similar products may be required to protect the very targets of their high-interest loans.

The Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) released proposed guidelines last week that will require banks to assess a borrower’s ability to repay the loan and meet necessary expenses without re-borrowing.  The US Consumer Financial Protection Bureau also released a ‘white paper’ highlighting problematic elements of payday loans, which leave a large percent of its vulnerable targets in a cycle of debt.

After ongoing engagement, encouraging banks to change abusive lending practices, UCF is pleased with this initial step and hopeful it will lead to more permanent legislation. To read more about the proposed guidelines, click here.

 
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