(NNPA)—The term “payday loans” often evokes images of stores with garish neon signs; but these products have moved into the banking sector that is supposed to be more respectable. About half a dozen banks now push payday loans, though they give them more enticing names such as “Ready Advance” or “Easy Advance.”
Yet there is nothing easy about a loan with a triple-digit interest rate and terms designed to entrap.
Responding to public concerns and new research, federal banking regulators recently issued proposed rules and called for public comment on reining in bank payday lending.
Thus far, consumer advocates and lawmakers at both the state and federal levels have spoken up. The issue is generating even more notice because bank payday loans hurt senior citizens disproportionately. According to research by the Center for Responsible Lending, more than one in four bank payday borrowers are Social Security recipients.
Florida’s U.S. Sen. Bill Nelson and Sen. Elizabeth Warren of Massachusetts together called for regulation that would specifically protect America’s older consumers. In a joint letter to the Office of the Comptroller of the Currency, the Senators cited their committee work as well as recent research by CRL.
“As Chairman and member of the Senate Special Committee on Aging, we take very seriously our responsibilities to seniors and elderly consumers who expect and deserve fair and transparent financial services,” said the Senators.
They added, “Social Security was created to provide seniors with financial support to help them cover basic living expenses not for banks seeking new sources of revenue by exploiting retirees with limited means. Therefore it is critical that banks be discouraged from using government benefits as proof of income, and we would hope such a provisions would be included in the final guidance.”