WASHINGTON (10/14/09)--The Washington Post cited a Chicago credit union’s payday loan alternative product as an example of innovation by the private sector in serving the unbanked in an article published Tuesday. North Side Community FCU offers members a six-month, $500 loan with a 16.5% interest rate. The credit union has made 5,000 loans since it introduced the loan several years ago, the Post said. The credit union doesn’t profit from its payday lending alternatives, but it hopes to help place members into good financial standing so they can then apply for profitable products--such as auto loans, credit union manager Ed Jacob told the Post. The article noted Congress is debating over the creation of a Consumer Financial Protection Agency, which is slated to provide federal oversight of the financial industry. Some industry representatives are opposed to the agency, saying that innovation is the key to reform, instead of legislation, the Post said. Many credit unions offer payday lending alternatives for their members. Several states, including Michigan, Arizona, Ohio and others have passed or are working on pieces of legislation that would restrict payday lenders, which routinely charge borrowers high interest rates. A payday lending group issued a release Tuesday indicating that the premise of the Post's article--that individuals who borrow from payday lenders are not banked--is inaccurate. Borrowers who receive loans from payday lenders are considered "banked," the group said. To read the full Post article, use the link.