Consumer Groups Call for FDIC Action on Predatory Lending

Groups call out FDIC-backed banks for acting as “front groups” for payday lenders

Andy Spears
2 min readFeb 4, 2022
Photo by Giorgio Trovato on Unsplash

The Consumer Federation of America (CFA) was joined by more than a dozen other consumer advocacy groups in calling on the Federal Deposit Insurance Corporation (FDIC) to take action against predatory lending.

“Last year, Congress took a stand against the harmful rent-a-bank model that is being used by predatory payday and installment lenders to make triple-digit interest rate loans that are illegal across the country by overturning the “fake lender” rule,” said Rachel Gittleman, Financial Services Outreach Manager with Consumer Federation of America. “But rent-a-bank lenders are alive and well, using a few FDIC-regulated banks to peddle predatory loans to consumers throughout the country. The FDIC must stop permitting its supervised banks from engaging in this harmful behavior.”

In a letter, the groups said:

“FDIC-supervised banks are helping predatory lenders make loans up to 225% APR that are illegal in almost every state. These rent-a-bank schemes often operate under the guise of innovative ‘fintech’ products, even as their high-cost, high-default business model inflicts harms similar to those inflicted by traditional payday lenders……

--

--

Andy Spears
Andy Spears

Written by Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .