Catching My Eye This Morning

A few tidbits here and there catching my eye on a rainy Thursday morning here in Champaign:

• The FDIC has approved a pilot project to encourage banking institutions to offer small-dollar lending products that would compete against the incredibly high-priced products offered by payday lenders and their ilk. Under the FDIC program, participating banks would offer loans of no more than $1,000, require mandatory savings components, have payment periods that extend beyond a single pay cycle, not impose prepayment penalties, and would have origination fees only in an amount that reflects the actual cost of originating the loan. When we talk about payday lending here at Credit Slips, the question is sometimes asked why mainstream lending institutions do not step into the gap. They are, slowly and carefully.
• The New York state legislature has approved a bill banning universal default clauses in credit card agreements. As far as I know, the bill is still awaiting Governor Spitzer's signature. This move follows on the heels of a bill signed into law in Nevada also banning the clauses. Both pieces of legislation will have little effect, however, as they will be preempted by the National Banking Act.
• In a prepared committee statement, Senator Charles Schumer signaled his intention to make his bill regulating mortgage brokers (S. 1299) a legislative priority (well, a priority right after they get done with the constitutional struggle of having the executive branch thumb its nose at the Senatre Judiciary Committee's subpoenas of yesterday). Consumer credit, be it mortgage debt or credit card debt, seems to be a hot topic on Capitol Hill. It looks like we will see some legislation coming out of Congress this term on the topic of consumer credit. Whether the White House will sign it will be another question.