Payday Lending

Payday lending – among the highest risk subsets of subprime lending – is characterized by small-dollar, short-term, unsecured lending to borrowers typically experiencing cash flow difficulties.

Some insured depository institutions have failed to properly assess and control the risks associated with their payday lending programs. The consequences of deficiencies in risk management practices for payday lending programs can be severe.

The risks of payday lending are challenging for bankers and merit the continuing attention of depository institution supervisors. This issue of FYI provides additional information about payday lending.

source: fdic.gov

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