Regulators strike at bank payday loans

  • Article by: Jennifer Bjorhus , Star Tribune
  • Updated: April 25, 2013 - 10:09 PM

Agencies want banks to disclose a clear interest rate and analyze a borrower’s ability to repay.

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formergopApr. 25, 1312:34 PM

It's like paying the mob for protect, against the mob.

stolaf80Apr. 25, 13 1:07 PM

Another win for government rule and less choice in the marketplace. People wouldn't be using these products if they didn't need them.

endothermApr. 25, 13 1:21 PM

This isn't about market choice, as the banks claim, it is about a dishonest, destructive practice that it is bad for everybody except a small number of loan sharks. The fact that US Bank and Wells Fargo want to get in on the action doesn't make it legitimate. This whole business is built on deceiving and squeezing extra cash out of already poor people. And when these people are stuck paying 300% interest, it creates social problems (abandoned houses, abandoned cars, abandoned pets, homeless children, etc.) that the rest of the community (and the tax payers) have to address. A few bankers make out like bandits, and we get left with the consequences. It is high time regulator put a stop to it.

thisislameApr. 25, 13 1:36 PM

Once again, the banks didn't require anyone to spend more than they have. This is like trying to eliminate obesity by getting rid of food.

stolaf80Apr. 25, 13 2:02 PM

"This isn't about market choice, as the banks claim, it is about a dishonest, destructive practice....." The galling thing about this issue is the people yelling the loudest against these loans have never needed one. When your car breaks down and you're faced with fixing it or not getting to work, a short term loan is a lifesaver. Been there, done that. This is another case of the elites deciding what's best for other people.

raineyrooApr. 25, 13 2:35 PM

304% percent weekly APR? I would be the mafia wouldn't charge that much. Personally, I would feel ashamed in offering up a product that took advantage of someone that vulnerable. Then again, when did those that ran the "too big to fail" banks ever care about their community?

endothermApr. 25, 13 2:39 PM

The problem is not the short term loan, the problem is the large fees and interest charges placed on these loans. The whole business is based on either deceiving people into accepting a bad loan contract or squeezing people who know better but don't have any other options. This regulation doesn't make payday loans illegal, it just requires that banks honestly advertise the costs and verify that customers have a reasonable chance of repaying the loan. This is just common sense and honsety in advertising. But it seems like most of these shady lenders will disappear if they are forced to actually tell the truth.

jeffknudsenApr. 25, 13 3:37 PM

I have used these a few times with my bank. Every time the cost is given before I accept it. I would rather pay $10 to get $100 one pay period earlier than bounce a check and pay $35.

stolaf80Apr. 25, 13 4:27 PM

Banks aren't going to make these loans because they don't want to "tell the truth" about the interest rate. These loans will dry up because banks will now have the expensive and risky burden of determining if the borrower can pay the loan back. In the end there will be no such short term emergency loans made by the banks. People will now only have family, friends, or "neighborhood resources" for loans. This is not a good thing.

falcon1681Apr. 25, 1310:52 PM

Leave it to Republicans to support an industry that blatantly rips off desperate people and robs them blind.


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