I don’t know how seriously to take this story.

A Bloomberg story picked up by Businessweek discuss how banks need to make up for lost overdraft revenue by getting into payday lending:

“The smarter banks are trying to resell overdraft protection to consumers as a different product,” said Elizabeth Rowe, group director of banking advisory services at Mercator Advisory Group in Maynard, Massachusetts.

Banks including Cincinnati-based Fifth Third Bancorp, San Francisco-based Wells Fargo & Co., the fourth-largest U.S. bank, and U.S. Bancorp, based in Minneapolis, are already making such loans, usually from $100 to $500, at annual rates of 120 percent if repaid in 30 days. They’re known as “checking advance products.” That puts them in competition with so-called payday loan stores, which make loans with similar terms to customers who generally don’t have credit cards to bridge the gap until the check comes, according to Rowe, whose firm advises banks.

A Colorado television station is taking a poll on payday lending.    Weigh in here.

From Reuters:

The Obama administration is still fighting for a single, independent consumer financial protection agency, U.S. Treasury Secretary Timothy Geithner said on Monday as lawmakers haggled over a financial reform bill.

Geithner seized upon the implementation of new rules under a credit card reform bill signed into law last year to argue that more such protections were needed for consumers.

“We continue to work on strengthening consumer protections and disclosure for a wide array of financial products,” Geithner said in a prepared statement.

“As we work with Congress on broader reform to make our financial system safer and more stable, we are also working to consolidate the fragmented authority of seven separate agencies into a single, independent and accountable Consumer Financial Protection Agency,” he added.

CFSA’s  annual meeting starts next Wednesday at the La Quinta Resort in Palm Springs.   More info here.

Senators Dodd and Shelby will introduce their competing financial reforms this week.    From the story:

Brett Neely: All last week, rumors swirled about what’s in both draft bills. But Karen Petrou of Federal Financial Analytics says no one knows for sure.

Karen Petrou: This is one of those periods in the legislative process where there’s lots of smoke and figuring out what’s fire-driven is very difficult.

There appears to be a deal that the Treasury Secretary will lead a new systemic risk council to police behavior that could take down the financial system. Both bills are also likely to propose ways to unwind failed financial firms without resorting to expensive bailouts.

But there’s likely to be one major difference between Shelby and Dodd’s bill, says Petrou:

Petrou: The only third rail is the Consumer Financial Protection Agency, as far as I can tell.

These editorial writers won’t be happy until citizens in Virginia have no access to credit.

PDLindustry news blogger falls out of his chair.

Law sunsets on June 30.  Industry is scrambling.   From the story:

The industry that provides small short-term loans is fighting in the Legislature to keep itself alive beyond a June 30 termination date that was included in the authorization law enacted 10 years ago.

Almost a month after the bill failed to even reach its first hurdle — a committee vote in the House — the measure remains stalled, even though the industry has earned the recent backing of several major business advocacy groups.

From the story:

Here are the main stipulations taking effect today.

• Credit card companies must give 45 days notice before changing terms, including raising interest rates. They must provide instructions for opting out.
• Issuers must apply payments to balances with the highest interest rate first. This is a welcome change for consumers. Previously, if you had a promotional rate of 0% for some purchases but a regular rate for others, your payments go to the promotional balance until paid in full, regardless of the timing of the purchases.
• Double-cycle billing is no longer allowed. You cannot be charged finance charges from a prior statement period.
• Payment due dates must be the same every month. With one of my credit cards, the due date can fluctuate by several days, from the end of one month to the beginning of another. This should end this practice.
• Issuers cannot raise the interest rate on existing balances. Most issuers have already gotten around this requirement by changing “fixed” interest rates to “variable” interest rates. Fixed and variable have specific definitions in the industry; “fixed” rates can still be changed at any time while “variable” rates are tied to an index and fluctuate often. There are other exceptions, as well.
• Customers must opt in to over-limit fees. If you would rather have the ability to charge above your credit limit, you can contact the issuer to allow this feature. Over the past few years, this has been the default, surprising card users who do not monitor their usage.
• Credit card companies cannot charge extra fees for paying your credit card bill. There is an exception. If you request an expedited (same-day) payment to avoid a late fee, you could be charged a processing fee.
• Minors will not be able to own their own credit cards. Any customers under 21 years of age must have a co-signer if they want accounts in their own names or show proof of income. Also, credit card marketers cannot use free gifts to lure college students to sign up within 1,000 feet of a campus.