A group called Grass Roots Organizing (GRO) held a rally in front of the Bank of America Building in downtown St. Louis, announcing that big banks are quietly financing the biggest payday lending companies. The announcement was based on a report issued by National People’s Action out of Chicago.
I videotaped portions of the rally, which was led by an energized woman named Robin Acree, Executive Director of GRO. When you understand how payday lenders operate (and subvert the political process), you’ll also understand why it takes some spunk to stand up to the lenders and to expose these shady dealings. [Note: Acree’s microphone had malfunctioned just prior to this segment–she was still carrying it, but it wasn’t working].
After seeing a bit of Acree’s presentation, you’ll see a two-minute confession by Graham McCaulley, who formerly worked at a payday lender and offers a laundry list of the unscrupulous practices he saw first hand.
Consider that these two presentations constitute a formidable indictment of big banks. Here’s an excerpt from the NPA document handed out at the St. Louis Rally:
Major payday loan companies receive their funding from the largest national banks . . . Major banks provide over $1.5 Billion in credit available to fund major payday lending companies . . . The major banks funding payday lending include Wells Fargo, Bank of America, U.S. Bank, JP Morgan Bank, and National City (PNC Financial Services Group) . . . Our analysis find that the major banks indirectly fund approximately 450,000 payday loans per year totaling $16.4 Billion in short-term payday loans . . . Major banks access credit from the Federal Reserve discount window at 0.5% or less, these banks extend an estimated $1.5 Billion annually to eight major payday lending companies, who in turn use this credit to issue millions of payday loans to consumers every year at average rates of 400% APR.
For a lot more information about 400% payday loans and why they should be outlawed, see this earlier post, which includes a powerful video of St. Louis attorney John Campbell (John and I work together as consumer lawyers at the Simon Law Firm). And isn’t it incredible that it is almost impossible to convince state legislators to cap consumer loans at the substantial rate of 36%? Sad but true.
While 43.6 million Americans live in poverty, the richest men of finance sure are getting pissy. First Steve Schwartzman, head of the Blackrock private equity company, compares the Obama administration's effort to close billionaires' tax loopholes to "the Nazi invasion of Poland." Then hedge fund mogul David Loeb announces that he's abandoning the Democrats because they're violating "this country's core founding principles" — including "non-punitive taxation, Constitutionally-guaranteed protections against persecution of the minority, and an inexorable right of self-determination."
http://www.huffingtonpost.com/les-leopold/poverty…
"[O]ne of the sketchier provisions in Dodd-Frank affirmatively prohibits Warren's new agency from setting a maximum interest rate on payday loans. This was inserted at the behest of Senator Bob Corker, R.-Tenn. (The payday-loan business was reportedly born in Corker's home state and continues to thrive there.) You might think the banking industry would pressure Congress to shut down payday lenders because they give lending a bad name. But a recent report by National People's Action, a network of community activist groups, and the nonprofit Public Accountability Initiative revealed that big banks extend $2.5 to $3 billion in financing to payday-loan companies. Wells Fargo is in especially deep."
http://www.slate.com/id/2270044/