S. 1878: Predatory Payday Loan Prohibition Act of 2005

http://www.govtrack.us/congress/billtext.xpd?bill=s109-1878

[quote]Introduced: Oct 17, 2005
Sponsor: Sen. Daniel Akaka [D-HI]
Status: Introduced (By Sen. Daniel Akaka [D-HI])

This text was automatically converted from PDF format. Formatting glitches are a result of that process.

Return to Bill Status | Download PDF | Full Text on THOMAS

II




109TH CONGRESS
S. 1878
1ST SESSION


To prohibit predatory payday loans, and for other purposes.




IN THE SENATE OF THE UNITED STATES
OCTOBER 17, 2005
Mr. AKAKA introduced the following bill; which was read twice and referred
to the Committee on Banking, Housing, and Urban Affairs




A BILL
To prohibit predatory payday loans, and for other purposes.

1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ``Predatory Payday
5 Loan Prohibition Act of 2005''.
6 SEC. 2. PROHIBITION ON CREDITORS MAKING PAYDAY

7 LOANS.

8 The Truth in Lending Act (15 U.S.C. 1601 et seq.)
9 is amended by inserting after section 109 the following:
2
1 ``SEC. 110. PROHIBITION ON PAYDAY LOANS.

2 ``(a) IN GENERAL.--A creditor may not make a pay-
3 day loan to any person, if the creditor knows or has rea-
4 sonable cause to believe that--
5 ``(1) the personal check or share draft that the
6 creditor receives from the person in exchange for the
7 loan is drawn on an insured depository institution or
8 an insured credit union; or
9 ``(2) the account that will be debited in ex-
10 change for the loan is a transaction account or share
11 draft account at an insured depository institution or
12 an insured credit union.
13 ``(b) DEFINITIONS.--In this section, the following
14 definitions shall apply:
15 ``(1) INSURED terms `in-
INSTITUTIONS.--The

16 sured depository institution' and `insured credit
17 union' have the meanings given those terms in sec-
18 tion 3 of the Federal Deposit Insurance Act and sec-
19 tion 101 of the Federal Credit Union Act, respec-
20 tively.
21 ``(2) PAYDAY term `payday loan'
LOAN.--The

22 means any transaction in which a short-term cash
23 advance is made to a consumer in exchange for--
24 ``(A) the personal check or share draft of
25 the consumer, in the amount of the advance
26 plus a fee, where presentment or negotiation of
S 1878 IS
3
1 such check or share draft is deferred by agree-
2 ment of the parties until a designated future
3 date; or
4 ``(B) the authorization of a consumer to
5 debit the transaction account or share draft ac-
6 count of the consumer, in the amount of the ad-
7 vance plus a fee, where such account will be
8 debited on or after a designated future date.''.
9 SEC. 3. PROHIBITION ON INSURED DEPOSITORY INSTITU-

10 TIONS MAKING PAYDAY LOANS.

11 Section 18 of the Federal Deposit Insurance Act (12
12 U.S.C. 1828) is amended by adding at the end the fol-
13 lowing:
14 ``(x) PROHIBITION CERTAIN UNSAFE UN-
ON AND

15 BANKING PRACTICES.--
SOUND

16 ``(1) IN insured depository in-
GENERAL.--An

17 stitution may not--
18 ``(A) make any payday loan, either directly
19 or indirectly; or
20 ``(B) make any loan to any other lender
21 for purposes of financing a payday loan or refi-
22 nancing or extending any payday loan.
23 ``(2) PAYDAY purposes of
LOAN DEFINED.--For

24 this subsection, the term `payday loan' means any




S 1878 IS
4
1 transaction in which a short-term cash advance is
2 made to a consumer in exchange for--
3 ``(A) the personal check or share draft of
4 the consumer, in the amount of the advance
5 plus a fee, where presentment or negotiation of
6 such check or share draft is deferred by agree-
7 ment of the parties until a designated future
8 date; or
9 ``(B) the authorization of the consumer to
10 debit the transaction account or share draft ac-
11 count of the consumer, in the amount of the ad-
12 vance plus a fee, where such account will be
13 debited on or after a designated future date.''.





[/quote]