Fed Action Asked on Payday Loans
Reosti, John, American Banker
As part of the continuing assault on payday lender-bank partnerships, more than 60 representatives of various advocacy groups have asked the Federal Reserve to sanction a Delaware-chartered bank.
The Wilmington-based First Bank of Delaware is one of a dwindling number still involved in payday lending. The $43.5 million-asset subsidiary of Republic First Bancorp in Philadelphia makes the loans in four states through agreements with three different check cashers. It had $5 million of the controversial short-term credits on its books at yearend.
This week 66 advocates signed a letter labeling First Bank a predator. They want the Fed to quash the bank's payday-lending operation, following the lead of the Office of Comptroller of the Currency and the Office of Thrift Supervision.
Jean Ann Fox, the director of consumer protection for the Washington-based Consumer Federation of America, said she thinks the pacts between banks and payday lenders could be eliminated if the Federal Deposit Insurance Corp. and the Federal Reserve took action.
"The comptroller and the OTS put a stop to their charters working with payday lenders, so the only place left for them to go is state-chartered banks," Ms. Fox said. The FDIC regulates state-chartered banks, and the Fed oversees holding companies.
Harry Madonna, Republic First's president and chief executive, had not returned calls by press time. …