Three Banks Exit Payday Business Under FDIC Pressure

The small pool of banks that offer payday loans got a little smaller as three banks regulated by the Federal Deposit Insurance Corporation (FDIC) recently opted out of the payday loan business. They are the First Bank of Delaware, Republic Bancorp Inc of Louisville, and County Bank of Delaware.

The Sargent Shriver National Center on Poverty Law and consumer advocates have criticized the FDIC in the past for allowing banks to partner with payday businesses that engage in predatory practices and pricing and increase legal, financial, and reputation risks to the banks making the loans. The FDIC, one of four federal banking agencies, had been the only one that did not hold banks to strict standards of risk management and compliance with consumer protection laws on payday lending.

“We are pleased that the FDIC is taking action to promote more responsible banking practices and protect consumers,” said the Shriver Center’s Dory Rand. The Shriver Center works with community groups, banks, regulators, and researchers across the country to foster access to mainstream financial services and asset-building opportunities. For more information, contact Dory Rand or Jami Schlafer at the Shriver Center.