Payday lender applies to buy bank
ARLINGTON, Va. - In a controversial move, an Ohio-based payday lending firm has formed a subsidiary corporation and applied to buy a $5 million asset national bank, according to a story in the American Banker. CNG Financial, which is the parent of payday lender Check-N-Go, has formed Cincinnati BancGroup Inc and applied with the Federal Reserve's Bank of Chicago to buy the Bank of Kenney, an Illinois bank, for $1.3 million. This is the first time a payday lender has attempted to buy a bank, the paper reported, though several payday lenders now partner with banks. The application has drawn fire from community groups and Democratic members of Congress, who have charged that the bank purchase is primarily an attempt to avoid the increasing number of state laws regulating payday lending. CNG has countered the critics by suggesting that it is trying to find a way to raise money to make more of the sorts of short term loans not available from banks any longer. "We're trying to bring the banking industry back into this market sector is has left," John Bruno, Cincinnati BancGroup's president told the paper.