Have you heard the good news?
Today, US Bank and Wells Fargo, both announced that they will no longer make high-interest, consumer loans that are similar in many regards to payday loans offered by storefront payday lenders and, increasingly, online.
Wells Fargo’s product, the direct deposit advance, was in the national spotlight, thanks to a consumer from Rocklin, California, named Annette Smith, who bravely spoke out about the nearly $3,000 in fees she paid after renewing her original $500 loan from a local Wells Fargo branch.
US Bank’s product, known as the checking account advance, also charged consumers triple digit interest rates.
The California Reinvestment Coalition advocates for low income communities and communities of color to have safe and fair access to financial products, so naturally has been a strong critic of payday loans offered by storefront lenders and by the banks.
You can read CRC’s press release and statements from our staff on our website: “Consumer Advocates Cheer the End of the Bank Payday loan in California”
For a brief review of why these loans are so harmful to consumers, check out these resources:
1) Congressional testimony: In July 2013, Annette Smith testified to the Senate Select Committee about her experience paying almost $3,000 in fees as she renewed a $500 Wells Fargo loan over the course of five years.
2) US Bank CRA exam: In June 2013, CRC authored a letter to Office of the Comptroller of the Currency during US Bank’s most recent CRA exam, citing concerns with the bank’s “Checking Account Advance.”
3) Research on Payday loans: A June 2013 report by CRC and national partners in New York, North Carolina, and Illinois, focused on the dangers of payday loans (offered by banks and storefront lenders).
4) Comment on proposed rules: In May 2013, CRC and 62 members and allies sent a letter to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, providing input on proposed rules about consumer safeguards for these types of loans.
5) Wells Fargo Shareholder meeting In April 2013, CRC and national partners traveled to Utah to attend Wells Fargo’s annual shareholder meeting, where Annette Smith, a Wells Fargo customer, told the CEO about her bad experience with the bank’s direct deposit advance loan.
6) Wells Fargo CRA Exam: In November 2012 CRC commented on Wells Fargo’s CRA exam, highlighting the direct deposit advance. Over 2,700 people contacted the OCC, calling on the bank regulator to give Wells Fargo a “failing grade” on its CRA exam.