Brighter Futures Begin with HOPE.


FDIC Final Rule Favoring High-Cost Lenders Puts Deep South Families at Risk

June 29th, 2020

November 19th, 2019

Today, the FDIC announced a final rule that will encourage high-cost lenders to partner with banks to enable high-cost lending and undermine state law protections. The FDIC rule, which follows a similar one issued by the OCC last month, will deepen the financial insecurity of people in the Deep South.

Diane Standaert, Director, Hope Policy Institute:

“The FDIC’s rule today does nothing to prevent the high-cost lenders’ arrangements happening in our region, contributing to the harm of these debt trap loans already saturating our communities.  Already, in four out of five state in our region, at least two high-costs lenders engage in these bank partnerships to make triple-digit interest rate loans.

HOPE’s research found these loans   will deepen people’s financial burdens, not relieving them, and we hear first-hand from our members about the resulting harms such as difficulty paying other bills, the psychological stress caused by unaffordable debt, and the subsequent inability to build wealth in the future.

High-cost lenders, such as payday lenders and car title lenders, strip away over $1.6 billion a year from the pocketbooks of people here in the Deep South.  The FDIC’s rule increases the risks that more high-cost lenders will extract additional fees, aided by the willing assistance of partnering banks.  States and Congress must move forward to enact protections, such as a rate of 36% or less, to stop the debt trap.”

Read more about our analysis in our comment to the FDIC:


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