Groups in Four Key States Call for End to Payday Lending, Joint Report Highlights Need for Strong Action by Federal and State Regulators

Published June 03, 2013

Organizations from California, Illinois, New York and North Carolina today called on federal and state regulators to ban all types of payday lending. The four organizations released a joint report highlighting the need for strong state and federal laws that prohibit payday lending, and filed comment letters to federal regulators urging an end to payday lending by banks.

The report, “The Case for Banning Payday Lending: Snapshots from Four Key States”, was released by California Reinvestment Coalition (CRC), NEDAP, Reinvestment Partners and Woodstock Institute. The report outlines the battles against the payday lending industry in states with strong usury cap protections, such as New York and North Carolina, and in states like California and Illinois with weaker laws that allow payday lenders to charge triple-digit APR loans that trap people in a cycle of debt. The report calls on states and federal regulators to take strong action against all forms of payday lending, including storefront, internet, and bank payday lending.

The groups, along with 110 allies, submitted comment letters from each of the four states strongly supporting proposed guidance by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) that would curb abusive payday lending by banks (which banks refer to as “deposit advance” lending). The comment letters also called on the OCC and FDIC to further strengthen the proposed guidance by prohibiting banks from reaching into customers’ accounts to collect on loans, and by capping fees and interest.

“Heavy lobbying by the payday lending industry has made it impossible to put meaningful limits on what payday lenders can charge in our state,” said Alan Fisher, Executive Director of California Reinvestment Coalition. “A uniform national rate cap would block payday lenders from making usurious loans in states with weaker consumer protection laws.”

“Payday lending is a symptom of fundamental inequities in our economic system – an especially toxic loan product that exploits the fact that millions of people don’t earn enough money to make ends meet,” said Sarah Ludwig, Co-Director of NEDAP.

“The FDIC and OCC have taken a positive step by proposing strong guidance that would strike at the bank-based payday lending model by requiring extensive underwriting to ensure a borrower’s ability to repay, and limit banks’ ability to repeatedly churn borrowers,” said Dory Rand, Executive Director of Woodstock Institute.

“Payday lending through store fronts, the internet or banks harms borrowers,” said Peter Skillern, Executive Director of Reinvestment Partners. We call on the Federal Reserve to follow the lead of the OCC and FDIC to take a firm stand against predatory lending.”

For more information:
Illinois: Courtney Eccles, Woodstock Institute, 312-368-0310,
California: Alan Fisher or Liana Molina, California Reinvestment Coalition, 415-864-4980,,
New York: Sarah Ludwig, NEDAP, 212-680-5100,
North Carolina: Peter Skillern, 919-667-1557,