FDIC Clarifies Scope of Payday Lending Rules

The FDIC today updated its 2005 guidance on payday lending by banks to emphasize that the guidance does not apply to banks providing bank services to payday lenders. The guidance applies to payday loan-style products made directly to consumers by banks.

“Financial institutions that can properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of business customers or individual customers operating in compliance with applicable state and federal laws,” the agency said.