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NCUA Chairman Matz Points to Gains in Credit Union Payday Loan Alternatives, Despite Recent NCLC Citations
Monday, June 10, 2013 6:30 AM

CUNA News recently reported that in light of the National Law Center (NCLC) and the Center for Responsible Lending (CRL)’s citations of credit unions offering high-priced short-term loans, NCUA is making aggressive efforts to pursue financial institutions offering payday loans that don’t meet agency-set standards, and lauding credit unions who are offering reduced, short-rate term loans and encouraging others to do so.

NCUA Chairman Debbie Matz wrote a letter last Thursday highlighting these efforts in response to the NCLC letter that identified nine credit unions who offered “high-priced” short-term loans, as well as good payday loan alternatives that many credit unions are offering.

One clear point Matz made in her letter of response was the fact that the number of credit unions still offering high-priced short-term loans is significantly fewer than it was just three years ago, when there were 58 credit unions offering them, emphasizing the fact that NCUA prohibits FCUs from “referring their members for a fee to third parties that offer payday loans with annual percentage rates exceeding an agency-determined cap,” according to the CUNA article. However, Matz also clarified that NCUA does not have authority over third parties or credit union service organizations offering payday loans. 

Additionally, Matz explained that of those nine credit unions cited in the NCLC/CRL letter, five are not making payday loans directly, but instead referring their members to Xtra Cash LLC, which is a third party loan provider. The other four credit unions, she said, are offering products in compliance with NCUA and other regulations.