[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1878 Introduced in Senate (IS)]








109th CONGRESS
  1st Session
                                S. 1878

      To prohibit predatory payday loans, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 17, 2005

   Mr. Akaka introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
      To prohibit predatory payday loans, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Predatory Payday Loan Prohibition 
Act of 2005''.

SEC. 2. PROHIBITION ON CREDITORS MAKING PAYDAY LOANS.

    The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended by 
inserting after section 109 the following:

``SEC. 110. PROHIBITION ON PAYDAY LOANS.

    ``(a) In General.--A creditor may not make a payday loan to any 
person, if the creditor knows or has reasonable cause to believe that--
            ``(1) the personal check or share draft that the creditor 
        receives from the person in exchange for the loan is drawn on 
        an insured depository institution or an insured credit union; 
        or
            ``(2) the account that will be debited in exchange for the 
        loan is a transaction account or share draft account at an 
        insured depository institution or an insured credit union.
    ``(b) Definitions.--In this section, the following definitions 
shall apply:
            ``(1) Insured institutions.--The terms `insured depository 
        institution' and `insured credit union' have the meanings given 
        those terms in section 3 of the Federal Deposit Insurance Act 
        and section 101 of the Federal Credit Union Act, respectively.
            ``(2) Payday loan.--The term `payday loan' means any 
        transaction in which a short-term cash advance is made to a 
        consumer in exchange for--
                    ``(A) the personal check or share draft of the 
                consumer, in the amount of the advance plus a fee, 
                where presentment or negotiation of such check or share 
                draft is deferred by agreement of the parties until a 
                designated future date; or
                    ``(B) the authorization of a consumer to debit the 
                transaction account or share draft account of the 
                consumer, in the amount of the advance plus a fee, 
                where such account will be debited on or after a 
                designated future date.''.

SEC. 3. PROHIBITION ON INSURED DEPOSITORY INSTITUTIONS MAKING PAYDAY 
              LOANS.

    Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is 
amended by adding at the end the following:
    ``(x) Prohibition on Certain Unsafe and Unsound Banking 
Practices.--
            ``(1) In general.--An insured depository institution may 
        not--
                    ``(A) make any payday loan, either directly or 
                indirectly; or
                    ``(B) make any loan to any other lender for 
                purposes of financing a payday loan or refinancing or 
                extending any payday loan.
            ``(2) Payday loan defined.--For purposes of this 
        subsection, the term `payday loan' means any transaction in 
        which a short-term cash advance is made to a consumer in 
        exchange for--
                    ``(A) the personal check or share draft of the 
                consumer, in the amount of the advance plus a fee, 
                where presentment or negotiation of such check or share 
                draft is deferred by agreement of the parties until a 
                designated future date; or
                    ``(B) the authorization of the consumer to debit 
                the transaction account or share draft account of the 
                consumer, in the amount of the advance plus a fee, 
                where such account will be debited on or after a 
                designated future date.''.
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