Payday Lending – Ohio

Curbs on payday loans a tough sell to Ohio lawmakers, By Jim Siegel, October 17, 2017, Columbus Dispatch: “When Ohio lawmakers pass a law that doesn’t come close to working as planned, they often fix it. Not so much with payday lending regulations approved nine years ago. Short-term lenders in Ohio today are charging the highest rates in the nation, according to The Pew Charitable Trusts. A Republican lawmaker who wants to change that says he’s getting pushback from GOP colleagues who control the legislature…”

Payday Lending

Payday lending faces tough new restrictions by consumer agency, By Stacy Cowley, October 5, 2017, New York Times: “A federal agency on Thursday imposed tough new restrictions on so-called payday lending, dealing a potentially crushing blow to an industry that churns out billions of dollars a year in high-interest loans to working-class and poor Americans.  The rules announced by the agency, the Consumer Financial Protection Bureau, are likely to sharply curtail the use of payday loans, which critics say prey on the vulnerable through their huge fees…”

Financial Stress Among Native Americans

Study shows high levels of financial distress among Native Americans, By David Erickson, May 2, 2017, Missoulian: “The use of high-cost borrowing methods such as payday loans and a lack of retirement and college savings plans may be keeping many in Montana’s Native American population in an endless cycle of poverty. There are more than 62,000 Native Americans in Montana, making up 6.6 percent of the state’s population, and a new national study has found that they are more likely to have high levels of financial distress compared to other demographic groups…”

Predatory Lending

Payday loans’ potentially predatory replacement, By Gillian B. White, August 12, 2016, The Atlantic: “Dangerous, high-cost lending isn’t going away anytime soon.  While some have heralded the Consumer Financial Protection Bureau’s long-awaited payday-lending regulations as significant progress toward the end of predatory lending practices, other, similar products have, as predicted, started to take their place…”

Payday Lending

Payday loans’ debt spiral to be curtailed, By Stacy Cowley, June 2, 2016, New York Times: “The payday loan industry, which is vilified for charging exorbitant interest rates on short-term loans that many Americans depend on, could soon be gutted by a set of rules that federal regulators plan to unveil on Thursday. People who borrow money against their paychecks are generally supposed to pay it back within two weeks, with substantial fees piled on: A customer who borrows $500 would typically owe around $575, at an annual percentage rate of 391 percent. But most borrowers routinely roll the loan over into a new one, becoming less likely to ever emerge from the debt…”

Payday Lending

  • 1,000% loans? Millions of borrowers face crushing costs, By Alain Sherter April 25, 2016, CBS News: “Last Christmas Eve, Virginia resident Patricia Mitchell borrowed $800 to help get through the holidays. Within three months, she owed her lender, Allied Cash Advance, $1,800. On the other side of the country, Marvin Ginn, executive director of Native Community Finance, a small lender in Laguna, New Mexico, reports that some customers come to him seeking help refinancing loans from nearby payday lenders that carry annual percentage rates of more than 1,000 percent…”
  • Payday lending: Will anything better replace it?, By Bethany McLean, May 2016, The Atlantic: “Fringe financial services is the label sometimes applied to payday lending and its close cousins, like installment lending and auto-title lending—services that provide quick cash to credit-strapped borrowers. It’s a euphemism, sure, but one that seems to aptly convey the dubiousness of the activity and the location of the customer outside the mainstream of American life.  And yet the fringe has gotten awfully large…”

Payday Lending

  • Payday loan users can also get hit by bank fees, watchdog finds, By Becky Yerak, April 20, 2016, Chicago Tribune: “High interest rates might not be the only problem for borrowers who take out payday loans online, a consumer watchdog says.  Borrowers who don’t keep enough cash in their checking accounts to pay off those short-term loans can also get hit with repeated overdraft or insufficient-funds fees from their banks, according to a report by the Consumer Financial Protection Bureau…”
  • Bank fees are a hidden cost of payday loans, By Stacy Cowley, April 20, 2016, New York Times: “Payday loans are well-known for their high interest rates and fees, but for many borrowers, they have a second, less obvious cost: the bank fees incurred when automatic loan repayments fall short.  Bank overdraft and insufficient-fund fees often add hundreds of dollars to the cost of a loan, according to a study released Wednesday by the Consumer Financial Protection Bureau, which is preparing to propose new rules for the payday loan industry.  The agency said it analyzed 18 months of transaction data from nearly 20,000 accounts showing payments to Internet-based payday lenders…”

Payday Lending

Feds aim to protect low-income users of ‘payday’ loans, By Josh Boak (AP), March 29, 2015, Detroit News: “Each month, more than 200,000 needy U.S. households take out what’s advertised as a brief loan.  Many have run out of money between paychecks. So they obtain a ‘payday’ loan to tide them over. Problem is, such loans can often bury them in fees and debts. Their bank accounts can be closed, their cars repossessed.  The Consumer Financial Protection Bureau proposed rules Thursday to protect Americans from stumbling into what it calls a ‘debt trap.’ At the heart of the plan is a requirement that payday lenders verify borrowers’ incomes before approving a loan.  The government is seeking to set standards for a multibillion-dollar industry that has historically been regulated only at the state level…”

Predatory Lending

  • Rise in loans linked to cars is hurting poor, By Jessica Silver-Greenberg and Michael Corkery, December 25, 2014, New York Times: “The rusting 1994 Oldsmobile sitting in a driveway just outside St. Louis was an unlikely cash machine. That was until the car’s owner, a 30-year-old hospital lab technician, saw a television commercial describing how to get cash from just such a car, in the form of a short-term loan. The lab technician, Caroline O’Connor, who needed about $1,000 to cover her rent and electricity bills, believed she had found a financial lifeline…”
  • Churches step in with alternative to high-interest, small-dollar lending industry, By Rebecca Robbins, January 9, 2015, Washington Post: “Every month for about three years, Nina McCarthy followed the same routine after payday. She’d go into a Check Into Cash near her home in the Richmond area, and pay off an open-end loan for $700 or $800 – and then she’d take out a new one for the same amount, never accumulating interest in the process. Then McCarthy’s overtime hours at work were cut. With rent, a car payment and a 3-year-old granddaughter to feed, McCarthy didn’t have $700 for Check Into Cash. McCarthy made a partial payment, but interest piled up rapidly, at a rate she recalls was 24.9 percent a month, or a nearly 300 percent annualized rate…”

Payday Lending – South Dakota

Payday loans could cease in South Dakota, By David Montgomery, December 14, 2014, Argus Leader: “An unexpected coalition is backing a campaign to ban payday lending in South Dakota, prompting the industry to warn of far-reaching consequences if it succeeds. Payday loans and an array of similar businesses — ‘signature loans,’ ‘title loans’ and others — target small-dollar loans at people with poor credit and savings. Supporters say they help low-income people borrow much-needed money, but an array of critics say the fees are far too high and trap borrowers in a spiral of debt…”

Payday Lending

New York Prosecutors Charge Payday Loan Firms With Usury, By Jessica Silver-Greenberg, August 11, 2014, New York Times: “A trail of money that began with triple-digit loans to troubled New Yorkers and wound through companies owned by a former used-car salesman in Tennessee led New York prosecutors on a yearlong hunt through the shadowy world of payday lending. On Monday, that investigation culminated with state prosecutors in Manhattan bringing criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of enabling payday loans that flouted the state’s limits on interest rates in loans to New Yorkers…”

Payday Lending

States look to crack down on payday lenders, By Elaine S. Povich, May 2, 2014, Stateline: “The demise this week of a Louisiana bill that would have reined in payday lending demonstrates how hard it is for states to regulate the quick loan industry, which consumer groups criticize as a trap for the working poor. Supporters say payday lenders, which emerged in the 1990s, provide a valuable service to lower income borrowers when they need small amounts of money to tide them over from one paycheck to the next. But critics say payday lenders lock desperate people into repeat loan cycles with annual interest rates that can approach 600 percent. An estimated 12 million borrowers use payday loans each year…”

Payday Lending

Payday loans cost economy $1 billion in 2011: study, By Mark Koba, May 2, 2013, CNBC: “Payday loans cost the U.S. economy nearly $1 billion and thousands of jobs in 2011, according to a report from the Insight Center for Community Economic Development. The study says that the burden of repaying the loans resulted in $774 million in lost consumer spending and 14,000 job losses. Bankruptcies related to payday loans numbered 56,230, taking an additional $169 million out of the economy…”

Payday Lending – California

Bill would limit number of payday loans to any one borrower, By Alejandro Lazo, April 17, 2013, Los Angeles Times: “A bill before the California Legislature would restrict the number of payday loans to any one borrower — an attempt to break the ‘debt cycle’ that ensnares some of the state’s poorest residents. Senate Bill 515 would bar the high-cost, short-term lenders from making more than six loans a year to any borrower. The bill, set to go before the Senate Banking and Financial Services Committee on Wednesday, also extends the minimum term of a payday loan to 30 days from 15…”

Payday Lending

Major banks aid in payday loans banned by states, By Jessica Silver-Greenberg, February 23, 2013, New York Times: “Major banks have quickly become behind-the-scenes allies of Internet-based payday lenders that offer short-term loans with interest rates sometimes exceeding 500 percent. With 15 states banning payday loans, a growing number of the lenders have set up online operations in more hospitable states or far-flung locales like Belize, Malta and the West Indies to more easily evade statewide caps on interest rates. While the banks, which include giants like JPMorgan Chase, Bank of America and Wells Fargo, do not make the loans, they are a critical link for the lenders, enabling the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely…”

Payday Lending

Regions, Courting the Underbanked, Defends Payday Loans, By Maria Aspan, June 18, 2012, American Banker: “For banks trying to serve more low-income customers, Regions Financial (RF) could become both a shining example and a cautionary tale. The Birmingham, Ala., bank has spent the past year trying to attract the poor, the young, immigrants and other types of customers whom most banks have long ignored. It has rolled out check-cashing services, prepaid cards and payday loans, and it is expanding those services; last week, a senior executive announced plans to offer prepaid cardholders savings accounts with matching fund contributions and check-imaging technology for faster deposits. As Regions actively courts the long-ignored underbanked population, it has faced both praise and criticism. Wells Fargo (WFC) and a handful of other banks also offer such products, and Regions’ new “Now Banking” services are pretty familiar to anyone who has ever walked into a Western Union (WU) or a payday lender office. . .”

Minimum Wage and Payday Loan Ballot Initiatives – Missouri

Groups submit petitions on raising Missouri’s minimum wage, limiting payday loans, Associated Pres, May 7, 2012, Springfield News-Leader: “Supporters of raising Missouri’s minimum wage and limiting payday loans submitted petitions Sunday to get the separate measures on the November ballot, beating this weekend’s deadline to turn in signatures. The proposed minimum wage increase would put Missouri’s minimum pay at $8.25 an hour starting in 2013, with an annual cost-of living adjustment in subsequent years. However, if the federal minimum wage were to rise above the state rate, then Missouri would adopt the federal wage and apply cost-of-living adjustments to that…”

Payday Lending – California

Consumed by payday loans: State legislators offer haven for lenders deemed ‘predatory’, By Karen de Sá, October 30, 2011, San Jose Mercury News: “Facing government crackdowns around the country, payday lenders are thriving in lightly regulated California, where they lure hundreds of thousands of desperate borrowers a year despite punishing, triple-digit interest rates. Seventeen states and the U.S. military have effectively banned payday loans, which attract low-income borrowers who need a cash advance on paychecks. Georgia has declared payday lending to be felony racketeering. But in California, payday storefronts outnumber Starbucks coffeehouses. Neon-splashed businesses touting slogans like ‘Cash as Easy as 1, 2, 3!’ promise hassle-free, short-term loans, while few borrowers heed the fine print: A two-week loan will saddle them with what amounts to an annual interest rate of 460 percent. Now, the multibillion-dollar industry is looking for more help from a state Legislature that has protected payday lenders for years…”

Financial Services for the Low-Income

Low-income borrowers get options beyond payday loans, By Christine Dugas, September 29, 2011, USA Today: “As more and more Americans rely on costly, non-traditional ways to borrow money, companies are starting to step up to provide safer, more affordable financial tools. Some 9 million families don’t have a bank account. And many of those who do have an account still consider themselves financially frail. Almost half of all households say they wouldn’t be able to come up with funds to deal with a financial shock of $2,000, says Annamaria Lusardi at George Washington University School of Business…”

Low-Income Families and Banking

Poor often don’t know benefit of banks, By Taryn Luna, July 6, 2011, Boston Globe: “Low-income families use costly check-cashing and loan services not because they lack access to banks, but because they lack knowledge of banking options and their advantages, according to a study by the University of Massachusetts Dartmouth. For example, the study found that about one in four low-income residents in the New Bedford area do not have a bank account because they believe they cannot afford it – although most community banks and credit unions offer low-cost or free accounts as required by state law. In addition, the study found, even low-income residents with bank accounts still use check-cashing establishments more than their banks. The study, which surveyed 173 low-income residents in New Bedford, belies perceptions that limited access to banks drives low-income families to use higher-cost alternatives, said Michael Goodman, an associate professor of public policy at UMass Dartmouth who oversaw the study…”