A new report from the Center for Responsible Lendinghas documented that payday lending at six large banks iscontinuing, and the reported alleged it is damaging consumersfinancially.

The center, which released the report on March 21, said the sixbanks are Wells Fargo, U.S. Bank, Regions Bank, Fifth Third Bank,Bank of Oklahoma and Guaranty Bank.  None of the banksnamed responded to requests for comment on the report. But WellsFargo has a frequently asked questions document on its websiteabout its Direct Deposit Advance program.

“It is important to note this service is an expensive form ofcredit designed for short-term borrowing needs,” the Wells FargoFAQ reads. “Alternative forms of credit may be less expensive andmore suitable to your long-term financial needs. Talk to your WellsFargo banker for more details.” 

“Triple-Digit Danger: Bank Payday Lending Persists” is an updateof a similar report that the Self-Help Credit Union affiliatedorganization prepared in 2011. In that report, the organizationidentified payday lending taking place, under different names, atthe six banks. The new report updated the last by indicating thatthe lending was still going on and documenting some of itseffects.

First, interest rates on the money are still veryhigh.  According to the report, an average 12-day loan atone of the banks runs between 225% and 300%.

Second, the median number of loans that an average borrowertakes out is 14, while more than 33% took out more than 20.

Third, depositors that use the loans are twice as likely asothers to incur overdraft fees, and more than 25% of borrowersreceive Social Security payments.

The report also blames the loan's structure for helping to forceborrowers into taking out multiple loans.

“The fundamental structure of payday loans–a short loan term anda balloon repayment–coupled with a lack of traditional underwritingmakes repeat loans highly likely,” the report contended. “Borrowersalready struggling with regular expenses or facing an emergencyexpense with minimal savings are typically unable to repay theentire lump sum loan and fees and meet ongoing expenses until theirnext payday. Consequently, though the payday loan itself may berepaid because the lender puts itself first in line before theborrower's other debts or expenses, the borrower must take outanother loan before the end of the pay period, becoming trapped ina cycle of repeat loans.”

The report acknowledged that the banks assert that they havesafeguards, such as installment payments, to keep the loans frombecoming too financially burdensome.  But the reportcharged the banks make the safeguards too difficult to use and thatthe number of loans per borrower strongly suggested they wereineffective. In Wells Fargo's case, for example, the reportindicated  that the installment loan program is only opento borrowers who have already taken out three conventional directdeposit advance loans and owe more than $300 on existing loans.

The report calls on federal financial regulators to shut downthe loan programs as they are currently structured and only allowthem to restart under terms that are much more favorable toborrowers, including allowing affordable installments and cappinginterest at 36%.

Meanwhile, pressure against banks' payday lending has beengrowing.

Two coalitions have written federal regulators once againcalling on them to do something to reign in banks' in-house paydayloans.

In letters to chairmen of both the FederalReserve and the FDIC, as well as to Thomas Curry, Comptrollerof the Currency and Consumer Financial Protection BureauDirector Richard Cordray,the two coalitions expressed gratitude for pledges of actionregulators have already made but said that those pledged actionsnow need to be made.

“Over the last year, the need for federal regulatory action hasonly become clearer,” wrote the unnamed consumer coalition, whichincluded 260 groups and individuals. “Despite banks' claims thatthese loans offer short-term, emergency solutions for theircustomers, banks have offered no data that would dispute that theseloans are trapping their customers in long term, high-cost debt.And despite efforts of many of the undersigned groups to engagedirectly with banks making payday loans; heightened negative mediaattention; and public expressions of concern from statelegislators, state regulators, and members of Congress, bankscontinue to make payday loans.”

The coalition included the AARP as well as the AFL-CIO.

The Cities for Financial Empowerment Coalition wrote in itsletter that “research suggests that payday loans may actually pushpeople out of the financial mainstream through involuntary closuresof bank accounts,” and quoted an FDIC report on the topic thatfound  “providing high credit on a recurring basis tocustomers with long lending; increases institutions' credit, legal,reputational, and compliance risks; and can create a seriousfinancial hardship for the customer.”

And there are indications the long running opposition to paydaylending has begun to bear fruit.

J.P. MorganChase announced March 19  that, beginning at the endof May, it will only charge a fee for insufficient funds the firsttime a check is presented in a 30-day period and not an additionalfee for every time the check might be put through. This is tolessen the costs of having a payday lender put a check throughmultiple times for a loan.

“This change is intended to address payday lenders and otherswho present repeated payments to customers that are not in thespirit of their signed agreement with the customer,” the bank saidin the announcement.

The bank also announced it would start working to identify caseof abuse of the Automated Clearing House system for checks and saidit would report such abuse to the National Automated Clearing House Association.

The bank will also step up educating the public and its ownstaff about its policy on stopping payments and make it easier fordepositors to close their accounts even when they have pendingpayday loan payments. “If we believe those pending charges areinappropriate, we won't honor them,” the bank said.

“We took a look at our policies and decided to make a number ofchanges,” said Ryan McInerney, CEO of consumer banking at Chase.“Some customers agree to allow payday lenders or other billers todraw funds directly from their accounts, but they may not know someof the aggressive practices that can follow. Those practicesinclude repeated attempts for payment that can result in multiplereturned items. We don't believe these practices are appropriate,and are making these changes to help protect customers from unfairand aggressive collections practices.”