This 2004 report updates information on the legal status of payday lending in the states, the growth of the business, and the continued use of thinly veiled retail transactions to obscure small loan transactions. It also updates recent federal bank regulatory actions regarding rent-a-bank payday lending and the failure of the Federal Deposit Insurance Corporation to come to grips with the misuse of federally insured state depository institutions by non-bank entities to make loans that don't pass legal muster for the non-bank lender. Finally, it recommends actions for state and federal policy-makers to close the loopholes used to peddle usurious small loans to financially vulnerable consumers.