Wells Fargo and US Bank Discontinue Payday Loan Products
January 17, 2014 - Durham, NC
DURHAM, NC--(Marketwired - January 17, 2014) - More good news: Wells Fargo Bank and US Bank announced this morning that they will discontinue their 225-300% annualized-interest-rate payday loan products. The announcements follow regulatory guidance finalized late last year by the banks' supervisor, the Office of the Comptroller of the Currency (OCC), as well as by the FDIC. The guidance advised banks under those agencies' supervision to ensure they are not making small-dollar loans their customers cannot afford to repay.
Wells Fargo and US Bank were the largest of a handful of banks making payday loans. Banks have touted the loans as a quick fix to a financial shortfall, but data have consistently shown that, like other payday loans, the banks' products trap customers in extended cycles of high-cost debt. A 2013 Consumer Financial Protection Bureau report found that banks' payday loans keep customers in triple-digit debt during an average of seven months out of the year.
Today's announcements, along with Regions Bank's similar announcement earlier this week, leave Fifth Third Bank, supervised by the Federal Reserve, as the sole large bank pushing payday loans to its customers.
About the Center for Responsible Lending: The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation's largest community development financial institutions.
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