Payday lenders are facing the realities of strict new rules on the deposit-advance loans they make. The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC) have proposed tighter regulation, and some industry experts believe such loans may no longer be economically viable for banks.

Of the new guidelines, Ballard Spahr Consumer Financial Services partner Jeremy T. Rosenblum said, "This is their way of killing the product." Mr. Rosenblum criticized the OCC and FDIC for not addressing the question of where consumers will go for short-term, small-amount credit if banks stop providing it. Yet he cited a footnote in the OCC document that indicates the proposed rules do not apply to overdraft lines of credit.

"So you could do a product that shared some characteristics with these deposit advance products if you structured it formally as an overdraft line of credit," said Mr. Rosenblum.

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