CRC’s Comments in Response to Proposed Guidance on Deposit Advance Products
Published May 30, 2013
CRC and 62 members and allies urged bank regulators to impose strong restrictions and safeguards on loans offered by banks that currently work exactly like payday loans. So-called “deferred deposit advances” require that borrowers pay back the amount borrowed in full with the customers’ next direct deposit of income. As found by the Consumer Financial Protection Bureau, these loans are virtually identical to storefront payday loans but are exempt from the regulations that apply to storefront loans. Bank payday loans often trap borrowers in cycles of debt on average 7 months long in which the customer often pays far more in fees than the loan was worth. CRC’s comments are in response to proposed guidance by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC) that would require banks to restrict eligibility, adopt underwriting standards, and reign in reliance on fee revenue from these loans. To see the comment letter, click here.