Until 2013, a few banking institutions had been siphoning huge amount of money yearly from client records through “direct deposit advance” — items that carried typical annualized interest levels all the way to 300%. Like storefront payday advances, deposit advance ended up being marketed as a periodic connection to a consumer’s next payday. But in addition like storefront pay day loans, these bank items caught borrowers in long-term, debilitating financial obligation.

But banking institutions destroyed curiosity about deposit advance because of 2013 regulatory guidance instructing banking institutions to evaluate borrowers’ ability to settle their loans according to earnings and costs. Now, amid a tempest of deregulation in Washington, the banking industry is pressing regulators to allow them back to the lending game that is payday. They should be aware of better.

The American Bankers Association called on the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency to back off their 2013 guidance, the FDIC to withdraw different guidance dealing with overdraft protection and the Consumer Financial Protection Bureau to withdraw its proposed rule on small-dollar lending in a recent policy document. Continua a leggere High-cost installment loans: No improvement over payday advances