VICTORY! Wells Fargo and US Bank drop predatory payday lending
Wells Fargo and US Bank announced they will be ending their payday-loan type product, typically called a “direct deposit advance”, by the end of this month.
Their action comes off the heels of a similar announcement made by Regions Bank earlier in the week. Iowa CCI and other grassroots community organizations had criticized the products as payday loans in disguise as they also carried triple digit interest rates and were due in full on the borrower’s next payday.
Member and Waterloo City Council member Pat Morrissey was encouraged by the news. Morrissey was one of eight grassroots leaders from the Midwest who just returned from a trip to Washington, DC where he met with top officials from the Federal Reserve and Consumer Financial Protection Bureau (CFPB) on payday lending issues facing everyday people in the heartland and across the country.
“Storefront payday lending is already damaging enough to our communities. We don’t need banks in the business too. We need the banks to step up to the plate and move to more traditional small dollar loans that truly benefit the community and don’t perpetuate the cycle of debt.” -Pat Morrissey
Iowa CCI’s national affiliate, National People’s Action (NPA), and other consumer groups had been engaged in a national campaign to get the big banks out of payday lending that often traps borrowers in a cycle of debt that lasts months, if not years.
For more than a year, CCI members and NPA allies had been pressuring the banks to get out of the payday lending business, as well as urging federal regulators from the OCC, Federal Reserve, CFPB and others to issue sweeping regulations to significantly curtail the worst abuses by businesses engaged in payday lending.
Payday loans are short-term loans due in full on the borrower’s next payday and carry triple digit interest rates that typically lead to repeat borrowing.
According to the Center for Responsible Lending, 98% of all payday loans go to repeat borrowers, casting serious doubt on the payday industry’s claim that their product is intended as a one-time fix for an unexpected financial emergency.
Members from across the state are committed to stopping the abuses of payday lenders at the local, state and national levels. Aside from federal legislation, only state legislatures can pass interest rate caps on payday loans, which in Iowa can exceed 400% APR. Iowa’s state legislature passed a bipartisan bill capping interest rates on car title loans in 2007 but has consistently failed to take similar action on payday lending.
Join the Fight!
Contact us for more information
Join as an Iowa CCI member today or chip in $10 to support our organizing on this issue.
Sign up for our E-Mail Action list to get the latest updates