Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

News Now

Washington
California Is Latest Front In Larger Payday Loan Fight
WASHINGTON (4/18/13)--The California State Legislature is the latest to take action to address payday lending issues, scheduling a Wednesday State Senate Banking and Financial Institutions Committee hearing on legislation that would impose new restrictions on payday loans and their lenders.

The California bill (S.B. 515) would ban consumers from taking out more than four payday loans per year. It would increase the payday loan repayment term to a minimum of 30 days per each $100 borrowed. Payday lenders would also be required to underwrite their loans and offer lengthier installment payment plans to customers in some situations under the terms of the bill.

Payday lending provisions have recently been offered in 24 other states, and many of these bills would create interest rate caps or limit fees that payday lenders may charge their customers, according to the National Conference of State Legislatures. Payday loans are prohibited in many states, and rate caps in several other states make the loans hard to come by. Maine, for instance, allows rate-capped payday loans only from authorized lenders.

Since 2007, interest rates for payday loans to military personnel have been limited to a 36%.

Legislation that would impose a similar 36% cap on all open- and closed-end consumer credit transactions was introduced last week in the U.S. Senate. The bill, known as the Protecting Consumers from Unreasonable Credit Rates Act (S. 673), would impact payday loans, mortgages, car loans, credit cards, overdraft loans, car title loans and refund anticipation loans.

Credit unions and the Credit Union National Association are committed to providing safe and affordable alternatives to predatory payday lenders, and credit unions across the country have implemented various programs in order to provide individuals in their communities an alternative to high-priced payday lenders.

Loans from federal credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small amount loan program.

Consumer Financial Protection Bureau Director Richard Cordray in February identified payday loans as one of four "classes of problems" that his agency will focus on going forward. CUNA has encouraged the agency to focus more attention in 2013 on payday lenders and other entities in the financial marketplace that engage in abusive practices but have been unregulated or under-regulated to date. (Use the resource link to read Feb. 21 News Now story: CFPB Consumer Group Meeting Spotlights Payday Lenders.)
RSS





print
News Now LiveWire
A recent report from @TransUnion says consumers born 1981 or later made up 27% of total auto-loan originations in 2014, up 16% from 2009.
2 hours ago
.@CUNA says new House bill is "further evidence" of lawmakers' interest in how @TheNCUA uses its funds from CUs. See News Now Monday.
21 hours ago
.@MECreditUnions announces winner of @YoungFreeME #SoundOff contest. @Sassquatch_Band will play Old Port Festival in June @PDD_Downtown
1 day ago
House Financial Services Com. to hold March 3 hearing to receive the semi-annual report of @CFPB Director Richard Cordray.
1 day ago
Rep. Jeff Miller (R-Fla.) re-introduced bill to ease veterans' access to loans for #smallbusiness purposes from a #creditunion (HR 1133)
1 day ago