To amend the Truth in Lending Act and the Federal Deposit Insurance Act to prohibit payday loans based on checks drawn on, or authorized withdrawals from, depository institutions and to prohibit insured depository institutions from making payday loans, and for other purposes.

Summary: Payday Loan Reform Act of 2007 - Amends the Truth in Lending Act to prohibit payday loans based on checks drawn on, or authorized withdrawals from, insured depository institutions.

 Amends the Federal Deposit Insurance Act to prohibit an insured depository institution from: (1) making or extending a payday loan, either directly or indirectly; or (2) making any loan to any other lender for purposes of financing, refinancing, or extending any payday loan.

Declares payday loan instruments or transactions void from inception.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Payday Loan Reform Act of 2007''.

SEC. 2. PROHIBITION ON PAYDAY LOANS BASED ON CHECKS DRAWN ON, OR 
              AUTHORIZED WITHDRAWALS FROM, DEPOSITORY INSTITUTIONS.

    Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended 
by adding at the end the following new subsection:
    ``(e) Prohibition on Payday Loans Based on Checks Drawn on, or 
Authorized Withdrawals From, Depository Institutions.--
            ``(1) In general.--A creditor may not make a payday loan to 
        any person, if the creditor knows or has reasonable cause to 
        believe that--
                    ``(A) any personal check or share draft that the 
                creditor receives from the person in exchange for the 
                loan is drawn on a depository institution; or
                    ``(B) any account that will be debited in exchange 
                for the loan is a transaction account or share draft 
                account at a depository institution.
            ``(2) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Depository institution.--The term `depository 
                institution' has the same meaning as in section 
                19(b)(1)(A) of the Federal Reserve Act.
                    ``(B) Payday loan.--The term `payday loan' means 
                any transaction in which a short-term cash advance is 
                made to a consumer in exchange for--
                            ``(i) 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
                            ``(ii) 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:
    ``(y) Prohibition on Insured Depository Institutions Making Payday 
Loans.--
            ``(1) In general.--An insured depository institution may 
        not make or extend--
                    ``(A) any payday loan, either directly or 
                indirectly; or
                    ``(B) any loan or credit 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.''.

SEC. 4. PENALTIES AND REMEDIES.

    (a) Contract Void.--Any credit agreement, promissory note, or other 
contract prohibited under any amendment made by this Act shall be void 
from the inception of such agreement, note, or contract.
    (b) Clarification of Liability.--Section 130(a) of the Truth in 
Lending Act (15 U.S.C. 1640(a)) is amended by inserting after the 
penultimate sentence the following new sentence: ``Any creditor who 
violates section 128(e) with respect to any person shall be liable to 
such person under paragraphs (1), (2) and (3).''
    (c) Preservation of Other Remedies.--The remedies and rights 
provided under any amendment made by this Act are in addition to and do 
not preclude any remedy otherwise available under law to the person 
claiming relief under any provision of law, including any award for 
general, consequential, or punitive damages.

SEC. 5. EFFECTIVE DATE.

    The amendments made by this Act shall take effect at the end of the 
30-day period beginning on the date of the enactment of this Act and 
shall apply to all loans initiated on or after such date and to any 
extension or renewal of loans made on or after such date.