Major banking institutions have actually swiftly become behind-the-scenes allies of Internet-based payday lenders that provide short-term loans with rates of interest often surpassing 500 %.
A growing number of the lenders have set up online operations in more hospitable states or far-flung locales like Belize, Malta and the West Indies to more easily evade statewide caps on interest rates with 15 states banning payday loans.
Even though the banking institutions, such as leaders like JPMorgan Chase, Bank of America and Wells Fargo, usually do not result in the loans, they have been a link that is critical lenders, allowing lenders to withdraw re re re payments immediately from borrowers’ bank accounts, even in states in which the loans are prohibited totally. The banks allow lenders to tap checking accounts even after the customers have begged them to stop the withdrawals in some cases.
These lenders simply couldn’t operate, ” said Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project, which works with community groups in New York“Without the assistance of the banks in processing and sending electronic funds. Read More