Applying safety and soundness standards to bank payday loan products follows longstanding principles and policy of the prudential regulators. Consistently, the prudential regulators, including the OCC, FDIC and the Federal Reserve, have addressed problems with a variety of consumer lending products by citing not only consumer protection concerns, but also safety and soundness concerns, even when those products are very profitable for the bank. As discussed further in this memo, bank payday lending shares key troubling characteristics of all the products addressed above and should, likewise, be addressed by prudential regulators based on both consumer protection and safety and soundness concerns.
