Community Financial Services Association of America chairwoman D. Lynn DeVault has come out against a recent report by the FDIC that characterized short-term loan users as "underbanked."
The response by DeVault – titled Banks can’t, and shouldn”t, compete for payday loans and published in the Cape Cod Times on Monday – was spurred by the Times’ running of an Associated Press article on December 3 about an FDIC survey on the amount of so-called "underbanked" consumers who live with little to no connection with any major bank.
Among the types of people that are lumped into the category of "underbanked" are those who utilize payday loans, which DeVault vehemently objected to.
"The FDIC mistakenly characterizes as ”underbanked” any household that has a bank account but used an alternative financial service, such as a payday loan, she wrote.
She added that the study had failed to factor in those who used payday loans and were not desperate for funding, but rather did so for other reasons such as the convenience of not having to deal with a bank.
"Just because adults with bank accounts choose to use an alternative financial service does not necessarily mean they are being underserved by their bank or are ”underbanked,”" she added.
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