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Payday Lenders">John Oliver takes on Payday Lenders

| August 12, 2014 | Payday Lenders">Reply
Payday Lenders">

John Oliver takes on Payday Lenders with a vengeance.   Check out Sarah Silverman’s payday loan alternative commercial at the end.

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I have often been highly critical of Payday Loans at this website. They are dangerous financial products that drive the working poor into bankruptcy, foreclosure and worse.

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Payday Loan Reform">Fake Payday Loan Reform

Payday Loan Reform">

Missouri and Utah are among the states in which legislators are proposing fake payday loan reform, per “States’ Attempts To Reform Payday Lending Are Often Just Smoke & Mirrors.”

Here’s an excerpt:

Sen. Mike Cunningham, who sponsored the Missouri bill . . . says it will protect consumers from some of the practices payday lenders have utilized for so long. Missouri’s proposed reform comes less than two years after a group called Missourians for Equal Credit Opportunity helped put an end to a ballot initiative that would have allowed Missouri residents to vote for or against capping the state’s interest rate at 36%. The current proposed bill does not feature any kind of rate cap, meaning interest for a typical two-week payday loan can balloon to more than 1,000%.

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payday loan industry money.">Grass roots effort versus payday loan industry money.

payday loan industry money.">

Last year my law partner John Campbell and I (we are two of the three attorneys at Campbell Law) donated our time and energy to serve as legal counsel to more than 118,000 Missouri citizens who sought enact a new law to cap the interest rates of payday loans (often 400% to 500% interest per year). What is it like to gather voter signatures when hundreds of thousands of dollars in industry money is pushing back? This excellent article by Propublica details the obstructionist tactic called “blocking” and the misleading ads sponsored by the payday loan industry.

What else can happen as part of a hotly contest ballot initiative? Notice the article’s description of the incident where someone broke into the car of a petitioner and stole 5,000 voter signatures. PayDayLoanShark

Most people I know are shocked to learn that payday loans carry such high interest rates. If Missouri voters were really allowed to vote on this issue, I do believe that they would overwhelmingly cap interest rates at 36 percent. Last year’s battle was between grass roots supported interest rate caps versus immense amounts of industry money funding an AstroTurf movement. The issue never came to a vote last year–the signature collection efforts barely fell short.

In 2014, we are looking to try once again to cap these predatory loans that are deceptive and dangerous products for most of those who fall prey to using them.

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payday lenders.">Big banks complicit with online payday lenders.

| February 25, 2013 | payday lenders.">Reply
payday lenders.">

Big banks are providing the funds for online payday lenders. This story from the NYT is not the least bit surprising, not that it makes this article any less disturbing.

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. In some cases, the banks allow lenders to tap checking accounts even after the customers have begged them to stop the withdrawals.

The article indicates that without the backing of the big banks, many of these payday lenders would cease to exist.

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payday loans">Missouri Supreme Court gives Missouri voters the option to slap a 36% cap on payday loans

payday loans"> Missouri Supreme Court gives Missouri voters the option to slap a 36% cap on <span class=payday loans" title="Missouri Supreme Court gives Missouri voters the option to slap a 36% cap on payday loans" />

On Tuesday of this past week (July 31, 2012), the Missouri Supreme Court ruled that a ballot initiative capping the interest rate of small loans at 36% (including payday loans) will appear on the Missouri general ballot this coming November. This court decision is terrific news for the many poor, working-poor and struggling middle class people who have been victimized by predatory lenders throughout Missouri.

I have previously discussed this hotly contested payday loan court case here. The payday loan industry had attacked this ballot initiative on numerous technical grounds, including constitutional issues, but in its July 31, 2012 decision, the Missouri Supreme Court shot down all of the arguments of the industry, holding that the payday initiative will go on the Missouri ballot in November. Here’s the entire opinion of the Court.

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Payday Lenders rule in Texas">Payday Lenders rule in Texas

Payday Lenders rule in Texas"> <span class=Payday Lenders rule in Texas" title="Payday Lenders rule in Texas" />

Here’s one way that deregulation has worked in Texas:

Large corporations that operate payday lenders, many of them based in Texas, have been steady contributors to Perry’s political campaigns over the last decade, donating upwards of $200,000, according to Texas campaign finance disclosure statements. In 2004, Perry appointed William J. White, a senior executive of one of the nation’s largest payday lending corporations, Cash America International, to a seat on the Texas Finance Commission, which is tasked in part with protecting the state’s consumers. Two years ago, the governor elevated White to the chairmanship of that body.

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Payday Loan song">Payday Loan song

Payday Loan song"> <span class=Payday Loan song" title="Payday Loan song" />

To put this topic in perspective, think of the terrible old banker, Mr. Potter, featured in the Christmas classic, “It’s a Wonderful Life.” Mr. Potter drove a very hard bargain, but he wanted customers to actually pay off their loans.  Keep in mind that Mr. Potter was lending out money at about 2%. If Mr. Potter could have charge as much as many credit card companies, he would want to stretch out his repayment plans. And if he could charge 500%, he might not actually ever want his loans to be repaid. Welcome to the world of payday lending.

During the day I work as a consumer lawyer at the Simon Law Firm in St. Louis, Missouri. My firm has filed several class actions again payday lenders based on their outrageous lending practices–on many occasions they systematically ignore the weak state laws that ostensibly regulate their conduct.   At my firm, we’ve met undeniable facts demonstrating that payday lenders make most of their money from people they would term “repeat customers,” but these people should more accurately be referred to as people who are trapped in high interest loans or 400% or even 500% interest.

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payday lending">Grass Roots Groups: Big Banks are quietly profiting from payday lending

| September 16, 2010 | payday lending">4 Replies
payday lending"> Grass Roots Groups:  Big Banks are quietly profiting from <span class=payday lending" title="Grass Roots Groups: Big Banks are quietly profiting from payday lending" />

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.

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payday loans at 36%">Five minutes is all it takes to help cap Missouri payday loans at 36%

payday loans at 36%"> Five minutes is all it takes to help cap Missouri <span class=payday loans at 36%" title="Five minutes is all it takes to help cap Missouri payday loans at 36%" />

As I indicated here, Missouri is considering a 36% rate cap for payday loans. Currently, payday lenders often charge 400% and 500% interest on such loans that are financially devastating to the poor and the working poor (Missouri’s 9% “usury” cap does not apply to payday loans).

Bill 2116 is now pending before The House Committee on Financial Institutions, which is chaired by Republican State Representative Mike Cunningham. This important bill will not get a hearing unless Mr. Cunningham decides to grant a hearing, at his discretion. This single bill, HB 2116, “combines two bills filed by Representative Mary Still in January into one bill dealing with both annual percentage rates (APR) caps and restrictions of nursing homes offering payday services to employees.”

Here’s how you can help. Please consider writing to Mr. Cunningham today, requesting him to hold a hearing regarding Bill 2116, to consider capping Missouri payday loans at 36% interest. Your letter can be two sentences, or you can spell out your reasons in more detail.

Mr. Cunningham can be reached at mike.cunningham@house.mo.gov . His snail mail address is:

Representative Mike Cunningham
201 West Capitol Avenue, Room 411-2
Jefferson City MO 65101
Office Phone: 573-751-3819
Fax: 573-526-1888

Even a small number of emails, faxes or letters will make a big difference. If you want to be part of a citizens’ movement cap interest rates of payday loans at 36%, please take a moment to write to Mr. Cunningham. I can’t emphasize enough that your single email, fax or letter could be the difference between this bill getting a hearing, or nothing being done.

As for the detailed reasons for imposing a rate cap, see my earlier post on the proposed legislation. I have also inserted (below) a letter written by John Campbell (an attorney with whom I work). Thank you so very much for considering this. Please do consider sending me a copy of any emails you send to Mr. Cunningham.

[Letter from John Campbell to Mr. Cunningham]

Representative Cunningham:

I am writing to request that the House Committee on Financial Institutions grant a hearing on Bill 2116, a bill to limit the interest rate on payday loans to 36%.

I have extensive personal experience with payday loans. I am an attorney, and I spend much of my time representing consumers. In the course of my practice, I have talked with dozens of payday loan borrowers. Their stories are remarkably similar. Payday loan borrowers are generally low wage earners with high school degrees or less, and they are typically in desperate situations when they go to a payday lender. In my experience, payday loans lead to create a debt cycle that is difficult for most borrowers to escape.

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