Payday loan lenders and micro-lenders continue to suffer from “bank discontinuance” issues as a result of “Operation Choke Point” launched by the Obama administration in August 2013.
The Community Financial Services Association of America (CFSA) and Advance America said ” a preliminary injunction was needed to end the back-room campaign of coercion by the Federal Reserve, the Federal Deposit Insurance Corp, the Office of the Comptroller of the Currency, the CFPB [ruled unconstitutional by a D.C. Court] and competitors masking themselves as so-called consumer protectionists.”
U.S. regulators are collaborating in an attempt to stop banks from offering banking services to micro-lenders in an effort to force consumers in need of emergency funding to beg, borrrow or steal when facing financial stress.
Nearly 50% of U.S. residents are unable to access $400 cash [Link to Federal Report] when faced with the need to fix their car to continue working, purchase a medical prescription for their child or a family member, turn on their heating or electricity…
Payday lenders, istallment lenders and additional small dollar lenders requested a federal judge for immediate relief!
The survival of mom and pop loan businesses is at stake!
It’s rumored that the big, multi-billion dollar online Fintech lending companies – SOFI, Lending Club, Prosper, Marcus, Avant, Enova… are adding additional pressure to wipe-out the small dollar lending industry; including the small independent store owners.
Advance America said its own situation became dire after five banks decided in the last month to cut ties, including a 14-year relationship with U.S. Bancorp, “putting it on the verge of being unable to maintain a bank account.”
The small lender national association injunction requests the federal court to “order the agencies to cease and desist from harming the reputations of Advance America and other CFSA members; from applying pressure on banks, encouraging them to terminate relationships with the banks and other CFSA members; denying CFSA members access to financial services; and from depriving members ability to pursue business.”
Instead of eliminating the “bad apples” of the payday industry, the agencies have “set about to choke off the life-sustaining financial oxygen that the entire industry, and millions of under-banked individuals, depend on.”
The CEO for CFSA, Dennis Shaul, stated that the results of Operation Choke Point for the payday loan, installment loan and micro-lending industry has been “dire.”
Mr. Shaul says that U.S. Bank has dropped its affiliation with several members, including Advance America, allegedly putting the company “on the verge” of being unable to maintain a bank account.
Another example by CFSA is thata smaller payday lender, DollarSmart Money Centers, was forced to close when it lost all its banking services.
Here’s a link to the Injunction by the CFSA vs. the FDIC
Here’s a link to the Original Request