Recent actions by the FDIC in an effort to combat illegal online financial transactions has resulted in a large number of legal lenders calling it quits and getting out of the business entirely.  These actions are  decimating the small dollar online lending industry (a multi-billion dollar industry)and making it difficult for consumers who need a small dollar loan to obtain one.

As a result, members of Congress have pressured the FDIC to issue rules that banks should follow in order to be in compliance with federal law regarding automatic bank account deductions.

These are expected by the end of September 2013.

UPDATE: THE FDIC HAS RELEASED A STATEMENT TO HELP CLARIFY THEIR INTENTIONS.  WE WILL UPDATE ON MONDAY SEPTEMBER 30, 2013.

According to Alan Zibel of The Wall Street Journal, the decision that banks still have to make is their relationship with Indian tribes, some of whom are very involved in the short term lending industry.  This is very murky legal territory and one in which the FDIC does not expect to solvewithin the next week.

In a letter to the FDIC, 30 Representatives from Congress expressed concern about the damage the rules were causing to legal lenders and in fact, all entities legally involved in the short term, small dollar lending industry.

Rep. Blaine Luetkemeyer (R., Mo.), who's a member of the House Financial Services Committee, is the leading voice on the issue. 
"My concern was that were trying to run these online lenders and payday lenders out of business," said Mr. Luetkemeyer, in an interview. "This type of judgmental type of behavior on the part of the FDIC is not their mission."

All of this activity comes as debate about payday lending, interest rates and exactly what rules lenders and banks must follow to be compliant, is at a fever pitch.

The FDIC announcement will be followed closely by the online lending industry as they have been hit particularly hard by the actions not just of the FDIC, but of individual states as well.  It is the hope of the industry that rules will be clarified and that short term lenders who are operating legally will not be in fear of legal action from multiple levels of government.