Adressing the Community Impacts of Payday Lending
The Center for Responsible Lending (CRL) is a leader in the fight to end abuses by “payday lenders” – small businesses that provide the working poor with advances on their pay - checks, generally at exorbitant fees that can trap borrowers in cycles of debt. A number of large banks are now offering similar services. Working closely with CRL, we filed a share - holder proposal with US Bancorp to address concerns relating to the bank’s “checking account advance” program, which allows customers to borrow against their next paycheck, for a 10% fee. If used repeatedly, this can be an extremely expensive loan, although the fee is lower than traditional payday lenders.
Our proposal prompted an informative dialogue with bank executives, culminating in an agreement to withdraw our proposal in exchange for continuing discussions and the bank’s commitment to publicly address how it is mitigating the potential risks of its service.