The report, “The Case for Banning Payday Lending: Snapshots from Four Key States,” describes state and local battles against the payday lending industry, comparing experiences of states that ban payday lending through strong state usury caps with states that permit payday lending. The state snapshots underscore how payday lenders charge triple-digit APR loans that trap millions of people in long-term cycles of debt, in states without strong laws that prohibit payday lending. The report–released by California Reinvestment Coalition, New Economy Project (formerly NEDAP), Reinvestment Partners, and Woodstock Institute–calls on states and federal regulators to end all forms of payday lending.

Joined by more than 100 groups from the four states, the four organizations also submitted detailed comment letters that strongly support guidance proposed by two federal banking regulators, the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC), which would curb payday lending by banks. The comment letters also called on the OCC and FDIC to further strengthen their proposed guidance by prohibiting banks from reaching into customers’ accounts to collect on loans, and by capping fees and interest.

“Heavy industry lobbying has made it impossible to put meaningful limits on what payday lenders can charge in our state,” said Alan Fisher, executive director of California Reinvestment Coalition. “A uniform national rate cap is needed to block payday lenders from making usurious loans in states with weaker consumer protection laws.”

“Payday loans perpetuate fundamental inequities in our economic system–and are an especially toxic product that exploits the fact that millions of people don’t make enough money to make ends meet,” said Sarah Ludwig, co-director of New Economy Project (formerly NEDAP), based in New York.

“The FDIC and OCC have taken a positive step by proposing strong guidance that would strike at the bank-based payday lending model by requiring extensive underwriting to ensure a borrower’s ability to repay, and limit banks’ ability to repeatedly churn borrowers,” said Dory Rand, president of Illinois-based Woodstock Institute.

“Payday lending, whether through storefronts, the Internet or banks, harms borrowers,” said Peter Skillern, executive director of Reinvestment Partners, based in North Carolina. “We call on the Federal Reserve to follow the OCC and FDIC’s lead to take a firm stand against predatory lending."


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For more information, contact:

California:  Alan Fisher and Liana Molina, California Reinvestment Coalition, 415-864-4980

Illinois:  Courtney Eccles, Woodstock Institute, 312-368-0310

New York:  Sarah Ludwig, New Economy Project, 212-680-5100

North Carolina:  Peter Skillern, 919-667-1557


California Reinvestment Coalition advocates for fair and equal access to banking and other financial services for California’s low–income communities and communities of color. CRC has a membership of close to 300 nonprofit organizations and public agencies across the state of California. New Economy Project (formerly NEDAP) works with community groups in New York City to promote economic justice and to eliminate discriminatory economic practices that harm communities and perpetuate inequality and poverty. Reinvestment Partners advocates for economic justice and opportunity. Woodstock Institute is a leading nonprofit research and policy organization in the areas of fair lending, wealth creation, and financial systems reform.