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Senators to FDIC: Stop Letting Payday Lenders Rent Bank Charters

WASHINGTON - The Consumer Federation of America applauded Sen. Charles Schumer (D-N.Y.) for urging Federal Deposit Insurance Corp. Chairman Donald Powell to "end the misuse of federally insured state banks to help payday lenders evade state usury and small loan laws." In a prepared statement, CFA Director of Consumer Protection...

By Staff Writer | Updated on July 27, 2004

WASHINGTON – The Consumer Federation of America applauded Sen. Charles Schumer (D-N.Y.) for urging Federal Deposit Insurance Corp. Chairman Donald Powell to “end the misuse of federally insured state banks to help payday lenders evade state usury and small loan laws.” In a prepared statement, CFA Director of Consumer Protection Jean Ann Fox said, “Federal bank regulators put a stop to their banks partnering with payday lenders due to unsafe and unsound practices. Only the FDIC permits 10 FDIC-insured state banks to participate in the payday loan business.” The 10 banks are: County Bank of Rehoboth Beach, Del.; First Bank of Delaware; BankWest Inc., S.D.; First Fidelity Bank, South Carolina; Community State Bank, S.D.; American Bank & Trust, S.C.; Bryant State Park, S.C.; Reliabank Dakota, S.D.; Republic Bank & Trust, Kent; and Venture Bank, Washington. “The FDIC guidelines on payday lending do not take the place of state consumer protections,” said Fox. “States cannot protect their consumers if store front lenders can evade state usury laws by partnering with banks in South Dakota and Delaware that have no limits on interest rates.”

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