I wanted to alert you to a sign-on letter (https://docs.google.com/forms/d/e/1FAIpQLSdpWNjCLghAnGhiahdPqU7lp2fAEjAz7cJDTtpMQOms1pHcig/viewform) asking banks not to offer payday loans. The interest rates are usually more than 128 percent APR! Our veterans, reservists, and National Guard members are subject to these loans, and so is the public.
The same day that the Consumer Finance Protection Bureau released its new payday rule, the interim Office of the Comptroller of the Currency (a separate federal regulator) retracted a four-year-old guidance that had prohibited banks from making payday loans. Now, the midwestern U.S. Bank has already openly considered the option, and Wells Fargo could follow suit. These “deposit advance loans” could allow a payday loan product that wouldn’t be covered by state interest rate caps.
This letter will be delivered to the OCC and to the banks to continue to make sure that any products banks offer are positive alternatives to payday loans and not a mirror of the same product.
We are continuing to seek proactive payday legislation and had some positive conversations with lawmakers last week. I think at a minimum, these conversations are great insurance against another expansion product. But I hope to see a positive bill.
Brig. Gen. James L. Bauerle, USA, ret., Carmel