CHICAGO—Proposed new guidance released today by two of the federal banking regulators could put an end to the worst practices of payday lending by  banks. The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) proposed standards that the banks they regulate would have to comply with regarding what they call “deposit advance” features on bank accounts and reloadable prepaid cards.

The proposed standards require an assessment of the borrower’s eligibility for the product and financial capacity  to repay the loan and meet other financial obligations, limit the number of such loans borrowers can receive in one year, and mandate adequate management and monitoring of the significant safety and soundness risks posed by offering these high-cost, short-term loans.  The public has an opportunity to comment on the proposed guidance.

A staggering amount of support is pouring in from around the country calling on federal regulators to end payday lending practices by banks and through bank support. News reports indicate that prudential regulators will release guidance on Thursday strongly limiting bank payday.

Yesterday, our partners at the Sargent Shriver National Center on Poverty Law authored a blog post demonstrating the large role banks play in these short-term, high-cost loans. Reinvestment Partners went further, identifying exactly how much banks are giving to fringe lenders.

Major federal policy decisions are so often made without consideration of what reality is like outside of the Beltway. One of our key goals at Woodstock is to make sure that the voices of people working on the ground in Illinois are heard by decision-makers in Washington, D.C. Our voices were heard loud and clear this year at the National Community Reinvestment Coalition annual conference, where we had the opportunity to take our priorities to bank regulators and 15 members of the Illinois Congressional delegation. We were joined by a delegation of nearly 30 Illinoisans from housing counseling agencies, community organizations, nonprofit developers, universities, and more.

Last week Illinois Senator Dick Durbin introduced the Protecting Consumers from Unreasonable Credit Rates Act to protect consumers of short-term loans such as payday loans and car-title loans. The bill complements the SAFE Lending Act, sponsored by many of the same Senators, which would protect consumers’ bank accounts and level the playing field for all payday lenders.

These short-term, small-dollar loans can have triple-digit annual percentage rates (APR) and are known to disproportionately affect low-wealth consumers and communities of color, often trapping them in a vicious cycle of debt. A recent Center for Responsible Lending report showed the average bank payday loan customer took out 19 loans in 2011.

Concern is growing among advocates, regulators, and the media about the increasingly enormous level of student loan debt in the United States. Outstanding student debt grew to over $1 trillion dollars in 2013, with private loans making up roughly $150 billion of that amount. Compared to federal student loans, private student loans are often more expensive, are more commonly marketed with questionable practices, and have fewer options for making payments more affordable if a borrower falls on hard times. There are at least 850,000 individual private student loans in default, totaling roughly $150 million.

Our friends at the Center for Responsible Lending (CRL) are gathering signatures for a letter to federal banking regulators urging them to stop banks from offering damaging payday-style loans.

The letter, which will be sent to leaders of the Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, outlines some of the most debilitating effects payday loans have on borrowers. No matter where they originate, these loans often carry interest rates (APRs) of up to 400 percent, trapping borrowers in a debt cycle that CRL says lasts an average of 175 days. 

We’re excited to celebrate 40 years of working together to expand financial justice for all communities, particularly low-wealth communities and communities of color. This October 2-3, we will gather with allies we work with shoulder-to-shoulder to campaign to prohibit redlining, limit the impacts of the foreclosure crisis, and expand access to sustainable financial products.

Many of you have contributed your passion and hours of effort to campaigns that are critical to Woodstock’s success. Please join us in this celebration by sharing your favorite memories of Woodstock victories, struggles, and actions.

The Senate Banking Committee voted earlier today 12-10 along party lines in favor of the confirmation of Richard Cordray as director of the Consumer Financial Protection Bureau (CFPB). Cordray’s nomination now goes to a vote by the full Senate. Unfortunately for Illinoisans, Senator Mark Kirk voted against Cordray, who has earned widespread, bipartisan praise for his work leading the CFPB.

Last week, we sent a letter to Sen. Kirk urging him to vote in favor of Cordray’s confirmation. Illinoisans continue to suffer the effects of predatory and deceptive financial practices. At a time when consumer debt issues have topped the list of complaints to the Illinois attorney general five years in a row, Sen. Kirk’s vote is disappointing.

There’s no two ways around it: A vote against Cordray’s confirmation is a vote for fewer protections for Illinois consumers. By law, the CFPB has limited ability to do the job it was created to do following the financial collapse in 2008 in the absence of a confirmed director.

CHICAGO—Female mortgage applicants are less likely to have their loans originated than are male mortgage applicants, Woodstock Institute finds in a new fact sheet. The Institute also found evidence  that female-headed joint applications (a female applicant with a male co-applicant) are less likely to have mortgages originated than are male-headed joint applications (a male applicant with a female co-applicant).

The Scheinfeld family of Woodstock, Illinois, recognized in 1973 a pressing need for action on problems that plagued low-wealth communities and communities of color in Illinois, such as redlining, housing discrimination, and disinvestment. The Scheinfelds established Woodstock Institute to fight these societal ills, and we continue that fight today.

To celebrate 40 years of applied research and advocacy on fair lending, wealth creation, community investment, and financial systems reform issues, Woodstock Institute will host a national research symposium and bash entitled Babies, Boomers, & Beyond: Economic Security, Community Prosperity, & Equity Across the Lifespan, on October 2-3, 2013.