Big bank payday bombshell

In an article in Business Week titled, Banks May Use Payday-Style Loans to Replace Lost Overdraft Fees, analyst predict the use of “payday loan” type products to recover the more than $15 billion in lost nsf fees.

“Legislation pending in Congress would exceed the Fed’s rules, limiting banks to one overdraft fee a month or six a year. Banks collected about $38 billion in overdraft fees last year, said Michael Flores, a management consultant whose clients include Citigroup Inc. and Wachovia Corp. He said the loss of revenue from the rules may be from $10 billion to $15 billion a year.”

This is pretty big news.

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