Payday Loan Industry Watch Home News: Archive News: Recent News: RSS Newsfeeds News: Archive News: By State News: By Big 7 Podcasts Reviews Tips Links
About Us
Contact Us
Donate/Sponsor
Site Help
Find a Lender
Header

Lawmakers urge payday loan alternatives

December 8, 2006 - Washington, D.C.

Two months after Congress approved a cap on loan interest rates for service members, lawmakers are urging financial institutions to look for ways to make affordable small loans available to all consumers, not just the military community.

Rep. Barney Frank, D-Mass., incoming chairman of the House Financial Services Committee, said that so-called payday loans and other high-cost loans affect many Americans, particularly those with low incomes. Frank spoke Wednesday at a conference hosted by the Federal Deposit Insurance Corp. to review options for affordable, responsible loans for the military community.

Congress recently passed a law limiting interest rates to 36 percent on payday loans and other consumer loans made to military personnel and their families. Such loans have been a persistent source of financial problems, especially among junior troops who may have to roll the loans over when they are unable to repay on time -- at annual interest rates of 400 percent or more.

The FDIC convened the conference to address the "pervasive need for more responsibly priced small-dollar loans," said Sheila Bair, chairwoman of the FDIC.

Frank said he intends to work with Bair and others "to go beyond the military community and reach out to others" to address the issue of high-cost loans.

Low-income customers go to payday lenders and similar establishments rather than traditional banks or credit unions for a variety of reasons.

The banking system, as it stands now, is "underutilized by the lowest-income people in our country," Frank said. But banks are not the problem, he said. "It's the lack of sophistication, and fear that keeps people out. Here's a chance for people in the banking system to dispel some unfair myths."

The model for providing some affordable loan alternatives for military families could be used to extend banking services to all lower-income people, he said.

The Defense Department has reported that high-interest loans can leave service members deep in debt, and can cause family stress and other problems that snowball into readiness issues for the military.

"All of us -- regulators and members of the banking community -- have a duty to help these individuals and their families develop alternative, affordable options so they can meet their credit needs," Bair said.

"These alternative products could be used to address an immediate financial need or simply to help them regain their financial footing." Banks have the ability to create a variety of affordable loans, along with savings plans, to meet the needs of the military community, she said, noting that a number of military banks already are offering these loans.

For example, Armed Forces Bank, which provides on-base banking services for 34 military communities in 17 states, offers a lending program that is an alternative to payday loans. The loan amounts generally are limited to one month's pay, said Don Giles, president.Troops can take up to 24 months to repay, and the annual percentage rate is 18 percent.

News Source

The News Journal, Karen Jowers, Army Times

Recent Related Stories - Military

Related Stories - Washington D.C.

Return

See: Recent News | Archived News | RSS Newsfeeds | News by State
Go to PLIWatch.org home.

E-mail This Page Open a new window and send this page to a friend.
Share this page by E-mail.
Podcasts Podcasts page.
Interview with David Farias - Founder, FYGO.com
Payday loan opponents caution people against taking payday loans. We interviewed David to better understand the practice and viability of an emerging source for loans: The Internet social lending network.

Interview with Pete Kowenhoven - Special Agent, FBI
Interview with Dr. Tom Lehman - Author of 'In Defense of Payday Lending'
Interview with Bill McCloskey - Email Data Source President and CEO
Reviews Reviews page.
July 21 - WeGiveCash claimed we could get $1,500. But, after entering qualifying customer information, we were declined and then forwarded to another Web site to re-apply.
Find a Lender Find a Lender page.
Claims to lend
To residents of
With fees per $100 loaned
On the Web since
reviewed by PLIWatch
small payday loan industry watch logo
Recent RSS Newsfeeds Archive Shown by State Shown by 'Big 7'
Home News & RSS Podcasts Reviews Tips Links Find a Lender About Us Contact Us Donate / Sponsor Site Help
Terms of Use Privacy Policy Site Map copyright © 2005-2024 pliwatch.org all rights reserved Updated: Nov 22, 2022 07:58 EST