Responsible Lending

The 2008 financial crisis and protracted recession created a pool of  "under-banked" borrowers who are in desperately need of affordable credit solutions. Lacking access to traditional credit products, many turn to payday or direct deposit advance loans which carry hefty fees and interest rates - some over 300% APR. These products may trap borrowers in cycles of long-term debt. ICCR encourages banks to provide affordable and sustainable credit products for those customers who need it most.


 

Featured ICCR Initiatives

Rate Transparency and Capping. Members of ICCR are asking banks to fully disclose and justify the rates they charge, both to their customers and to their investors. As a first step, they're asking the banks they hold to adhere to the new leveraged lending guidelines developed by the Federal Deposit Insurance Corporate and the Office of the Comptroller of the Currency, which are intended to ensure safe & sound lending activities. 

One key provision is more thorough underwriting  of deposit advance loans, based on a borrower's ability to repay a loan without re-borrowing. A second, calls for a "cooling off period" - in essence, a cap on the number of times a borrower can take out a loan in a 12 month period, to reduce the risk of repeat borrowing. Members are also suggesting that banks could model their rates on the 35% APR cap on payday loans that protects members of the military and their families.


 

Featured Resources

Banks at the Crossroads: How to Create Economic Justice for the Under-Banked  

Payday Lending Abuses and Predatory Practices: The State of Lending in America and its Impact on U.S. Households

Bank Payday Lending 

 

 

 

 

 

 

 

 

 

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