Payday Loan Times

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First Bank of Delaware Puts End to Payday Loans

Filed under: Delaware — J.J. Cameron at 11:14 am on Thursday, February 23, 2006

Under pressure from federal regulators, First Bank of Delaware plans to end its involvement with with payday loans and cash advances.

The announcement by the Brandywine Hundred-based bank follows a similar move late last year by Rehoboth Beach-based County Bank. Both banks made the loans available through partner companies that operate storefront locations nationwide.

In a brief statement released late Tuesday, First Bank of Delaware acknowledged that the Federal Deposit Insurance Corp. had ordered the bank to stop its payday-lending involvement, unless the bank could fix unspecified problems with oversight of the lending. As a result of the regulatory pressure, the bank said it has decided to stop payday lending “in a time period that has yet to be determined.�?

Payday loans have drawn strong criticism from consumer activists because they can carry interest charges of as high as 900 percent. They are known as payday advance loans because borrowers pledge to pay back the amount borrowed with future paychecks.

The cash loans are intended to be short-term, but borrowers sometimes extend them for months, incurring more interest. Concern about the practice of extended payday loans led federal bank regulators in 2005 to limit the duration of the loans to no more than 90 days in a 12-month period.

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Pingback by Payday Loan Times » Blog Archive » Delaware Payday Loans Soar in Popularity

Monday, April 10, 2006 @ 2:49 pm

[...] In Delaware, 300 such businesses have taken their place alongside the 260 mainstream bank branches in middle-income neighborhoods and commercial districts throughout the state, data show. No longer confined to poor urban areas, they dot strip malls along Kirkwood Highway outside Wilmington, DuPont Highway through Dover and Del. 1 through Rehoboth Beach, with neon signs promising 10-minute approvals for borrowers with bad credit. [...]

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