Hagan Amendment an “overdraft fee windfall”
May 3, 2010 | federal legislation, industry | Comments (0)From today’s CFSA news release:
The Community Financial Services Association of America (CFSA), the industry representing storefront payday lenders, said that Senator Kay Hagan’s (D-NC) proposal to limit payday advances to six per year will only force consumers to use more overdraft protection, a more costly alternative to payday loans.
Hagan said she will introduce her bill, “The Payday Lending Limitation Act of 2010,” as an amendment to financial reform legislation currently on the Senate floor.
“Consumers are the losers under Senator Hagan’s plan,” said D. Lynn DeVault, board chair of CFSA. “By reducing access to payday loans, consumers will be forced to use more overdraft protection incurring an additional $14 billion in fees.1 It’s an overdraft fee windfall for banks. Just as important, Hagan’s amendment will wipe out as many as 155,000 jobs2 on Main Street while rewarding Wall Street’s bad behavior.”
DeVault said that payday loans are legitimate lending instruments that fill the gap for consumers who otherwise are unable to make ends meet during these tough economic times. Payday loans are regulated heavily in the 34 states the industry operates in.
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DeVault said, “Payday lending did not cause the financial meltdown that brought the U.S. and world economies to the brink of disaster. No one disagrees that the actions of mega-banks put us in the spot we’re in today. So why then does the Hagan amendment carve out those same institutions for charging overdraft fees that penalize consumers?”
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