FDIC to Investigate Reports of Banks Engaging in Payday Lending
In March 2012, Trillium Asset Management, along with 250 national, state and local organizations and individuals, sent a letter to the Consumer Financial Protection Bureau, The Federal Reserve Board, the FDIC and the Office of the Comptroller of the Currency asking the regulators to stop banks from making predatory payday loans, which can carry annual interest rates of nearly 400%
The letter focused on deposit “advance” loans which banks structure like loans from payday lenders. These loans are high-cost and have a short-term balloon repayment, trapping low-wealth and low-income borrowers in a cycle of expensive and increasing debt, causing serious financial harm.
In his May 29, 2012 response, FDIC Acting Chairman Martin J. Gruenberg said, “The FDIC is deeply concerned about these continued reports, consequently, I have asked the FDIC’s Division of Depositor and Consumer Protection to make it a priority to and recommend further steps by the FDIC.”
You can read Mr. Gruenberg’s letter here.