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A PREDATORY MODEL that can’t be fixed: Why banks should be kept from reentering the payday loan business

By the Progressive Blog Policy Watch

[Editor’s note: In the new Washington, D.C. of Donald Trump, many once-settled policies in the realm of consumer protection are now “back on the table” as predatory businesses push to take advantage of the president’s pro-corporate/anti-regulatory stances. A new report from the Center for Responsible Lending (“Been there; done that: Banks should stay out of payday lending”) explains why one of the most troubling of these efforts – a proposal to allow banks to re-enter the inherently destructive business of making high-interest “payday” loans should be fought and rejected at all costs.]

Banks once drained $500 million from customers annually by trapping them in harmful payday loans. In 2013, six banks were making triple-digit interest payday loans, structured just like loans made by storefront payday lenders. The bank repaid itself the loan in full directly from the borrower’s next incoming direct deposit, typically wages or Social Security, along with annual interest averaging 225% to 300%.

Like other payday loans, these loans were debt traps, marketed as a quick fix to a financial shortfall. In total, at their peak, these loans—even with only six banks making them—drained roughly half a billion dollars from bank customers annually.  These loans caused broad concern, as the payday loan debt trap has been shown to cause severe harm to consumers, including delinquency and default, overdraft and non-sufficient funds fees, increased difficulty paying mortgages, rent, and other bills, loss of checking accounts, and bankruptcy.  Read more

SheVille Team

We are a one-of-a-kind magazine that provides local, regional, national and international information about women’s lives and education, performing and visual arts and writing, the environment, green living and sustainability and regional Western North Carolina business, people and events. “Villages preserve culture: dress, food and dance are a few examples. As villages grow in population and turn into towns, local cafes make way for large American chains. Handmade leather sandals are discarded for a pair of Western sneakers. Due to its small size, a village fosters a tight-knit sense of community. Justpeace.org explains the meaning of the African proverb, “It takes a village,” by stating that a sense of community is critical to maintaining a healthy society. Village members hold a wealth of information regarding their heritage: they know about the ancient traditions, methods of production and the resources of the land. When villages become dispersed or exterminated in times of war, this anthropological knowledge disappears. Large cities are not as conducive to growing and producing foods such as fruits and vegetables. Villages, on the other hand, usually have ample amounts of land and other resources necessary for growing conditions.” The Importance of Villages by Catherine Capozzi Our Mission SheVille.org provides readers with information important to women’s lives and well-being. We focus primarily on the areas of education & health, business & finance, the arts & the environment. We are particularly interested in local & regional resources, organizations & events.
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