Article

2010-02-23 Economy

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Posted by Anguper Hupomosing9418 2010-02-23 10:56|| || Front Page|| [11132 views ] Top

#1 ...
U.S. banks may expand their short- term lending at interest rates of 120 percent or more as they seek to replace more than $15 billion in lost revenue because of regulations limiting overdraft fees.

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The banks dont call the advances payday loans because its a very tarnished, negative brand, said Rowe, who estimates U.S. banks may lose from $15 billion to $20 billion in revenue when Federal Reserve rules take effect July 1. The rules will prohibit banks from charging overdraft fees at automated teller machines or on debit cards unless a customer has agreed to pay for exceeding account balances.

For consumers, getting a short-term, high-interest loan from a bank might be worse than going to a payday store, said Lauren Saunders, managing attorney with the National Consumer Law Center in Washington. A bank has direct access to consumer accounts, meaning its loans will be paid off first, ahead of food, housing or utilities, she said.

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National banks making payday-type loans unfairly compete with payday loan stores because theyre exempt from state laws limiting interest rates, said Steven Schlein, spokesman for the Community Financial Services Association of America, an Alexandria, Virginia-based trade association, which represents payday lenders. National banks like Wells Fargo, U.S. Bancorp and Fifth Third are federally regulated, while payday lenders are overseen by the states.

What the banks are doing are payday loans, Schlein said. Lets have everybody operate under the same system.

Posted by swksvolFF 2010-02-23 16:39|| 2010-02-23 16:39|| Front Page Top

#2 Are they gonna hire some leg breakers too?

Posted by Ebbang Uluque6305 2010-02-23 19:08|| 2010-02-23 19:08|| Front Page Top

#3 ..while payday lenders are overseen by the states.

Been an issue even during 'good times'. Several states have put usury limits on such loans. Use to have state usury limits on all loan type transactions till the great inflation of the late 70s, early 80s when the bankers conned the states to remove them rather than tie them to percentages above prime. That's why we still have credit card rates at 18 and 21 percent for years while prime flatlined under 5 percent by the late 80s.

Posted by Procopius2k 2010-02-23 19:28|| 2010-02-23 19:28|| Front Page Top

#4 More and more credit cards are for bad risks. Banks are writing off 10% of credit card balances these days. They have to get that money some where. FrankGly, you're a fool if you use a credit card these days.

And repealing the usery laws only allowed banks to compete with loan sharks who break a leg when you miss too many payments.

Posted by Nimble Spemble 2010-02-23 20:00|| 2010-02-23 20:00|| Front Page Top

#5 FrankGly, you're a fool if you use a credit card these days.

Is FrankG available for comment?

Posted by Pappy 2010-02-23 21:38|| 2010-02-23 21:38|| Front Page Top

#6 thx Pappy - I only have two cards, one with a low limit ($500) I got in my early low-credit college days (with a low APR, still) that I use for on-line purchases, in case of intercept, the risk is low. The second card is for extreme emergencies with a five-digit limit that I don't use online, and due to my long term responsible use, I wasn't hit during the reshuffle, so I resent my inclusion in your blanket slur, Mr. NS. A retraction is in order or an admitting of very clumsy fingering, prolly due to alcohol and lack of spellcheck.

*/verbal slap and demand of duel*

Posted by Frank G 2010-02-23 22:10|| 2010-02-23 22:10|| Front Page Top

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