Wednesday, September 15, 2010

Big banks play key role in financing payday lenders

People who pay high fees to borrow from so-called payday lenders generally don't have bank accounts, but that doesn't mean banks aren't making money from them.


Major banks led by Wells Fargo & Co., US Bancorp and JPMorgan Chase & Co. provide more than $2.5 billion in credit to large payday lenders, researchers at the Public Accountability Initiative estimate in a report released Tuesday.

The financing provides vital support for an industry criticized for charging effective annual interest rates that can top 400%, the researchers said.

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