The consent order against California Check Cashing Stores is part of a broader crackdown by the Department of Business Oversight on small-dollar lenders trying to skirt interest-rate limits.
Tom Meuser, the chairman of El Dorado Savings in California, said he could not get the necessary two-thirds backing from his shareholders because of recent declines in bank stock prices.
A state-backed bank would not be financially feasible because capital requirements would be too high and it likely wouldn’t return profits to the state for at least 30 years, consultants concluded.
Financial institutions had used existing banking laws as a shield against broader privacy protections, but a California law enacted this summer could threaten that strategy.
