Groups In Four Key States Call For End To Payday Lending

Leading financial justice organizations from four key states today called on federal and state regulators to ban all types of payday lending. The organizations, from California, Illinois, New York, and North Carolina, released a report highlighting the need for strong state and federal laws and filed detailed comment letters with federal regulators urging strong action to end payday lending by banks.

The report, "The Case for Banning Payday Lending: Snapshots from Four Key States," describes state and local battles against the payday lending industry, comparing experiences of states that ban payday lending through strong state usury caps with states that permit payday lending. The state snapshots underscore how payday lenders charge triple-digit APR loans that trap millions of people in long-term cycles of debt, in states without strong laws that prohibit payday lending. The report-released by California Reinvestment Coalition, New Economy Project (formerly NEDAP), Reinvestment Partners, and Woodstock Institute-calls on states and federal regulators to end all forms of payday lending.

Joined by more than 100 groups from the four states, the four organizations also submitted detailed comment letters that strongly support guidance proposed by two federal banking regulators, the Office of Ihe Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC), which would curb payday lending by banks. The comment letters also called on the OCC and FDIC to further strengthen their proposed guidance by prohibiting banks from reaching into customers' accounts to collect on loans and by capping fees and interest

"Heavy industry lobbying has made it impossible to put meaningful limits on what payday lenders can charge in our state," said Alan Fisher, executive director of California Reinvestment Coalition. "A uniform national rate cap is needed to block payday lenders from making usurious loans in states with weaker consumer protection laws." "Payday loans perpetuate fundamental inequities in our economic system-and are an especially toxic product that exploits the fact that millions of people don't make enough money to make ends meet," said Sarah Ludwig, co-director of New Economy Project (formerly NEDAP), based in New York.