Overdraft in Congress’s sights
September 21, 2009 | Washington Post, alternatives, federal legislation, industry | Comments (0)From today’s Washington Post front page:
A backlash is brewing on Capitol Hill against banks that charge large fees for overdrafts without asking or telling customers, the latest sign that the financial crisis is shifting the balance of power from banks toward borrowers.
Banks struggling to survive have become increasingly reliant on the fees, which could total $38.5 billion this year.
Crackdown on ODP?
September 18, 2009 | Washington Post, alternatives, federal legislation, industry | Comments (0)Big Washington Post story today:
Sen. Christopher J. Dodd (D-Conn.) plans to introduce legislation in the next few weeks cracking down on overdraft fees, the controversial charges that banks slap on customers who overspend their account balances.
The bill is likely to require companies to obtain permission from customers before enrolling them in overdraft programs, in which the bank automatically lends as much as a customer needs in exchange for a fee on each transaction.
Banks bargain with card holders
September 10, 2009 | Washington Post, alternatives, industry | Comments (0)Banks realize they have to reduce the financial stress on consumers. From today’s Washington Post:
Much public attention has been paid to efforts at modifying mortgages to keep borrowers from losing their homes. But in another battered corner of the credit market, credit card issuers are quietly negotiating with borrowers rather than giving up entirely on millions of debts. Lenders are looking to restructure credit card accounts by lowering interest rates or minimum monthly payments for a specific period of time, waiving fees, or settling the debt by accepting less than what is owed.
Washington Post editorializes in SUPPORT of check cashers!!!
August 19, 2009 | Washington Post | Comments (0)The editorial , among other things, says that check cashers fill a “legitimate need”; that legislation to restrict check cashers “misses the point”; says that check cashers locate “where there is demand for their services” and concludes that “the proposed restrictions are draconian.”
Check-cashing stores cater to the “unbanked,” as well as any others who are willing to pay a fee for the ease and convenience they provide. Often open when banks are not, these stores fulfill a legitimate need for many workers in Prince George’s County who are unable to maintain a bank balance or who prefer quick access to cash. Check-cashing stores are already limited by state law in the fees they can charge, and a state office licenses and regulates them.
Yet in the campaign to make Prince George’s gorgeous, such establishments are an easy target. A perception that they make neighborhoods undesirable, drive away other businesses and contribute to crime has resulted in a positive community response to the council proposal. But the proposed restrictions are draconian. They limit the hours of business for check cashers, require them to provide security guards and bulletproof glass, and prevent them from sharing space with other businesses. This last clause is especially problematic, as check-cashers currently share space with everything from grocery stores to Wal-Marts. True, people leaving with cash are easy targets for crime. But the same could be said of ATMs or even traditional banks. What sets check-cashing stores apart from these businesses is their image. Such establishments are not associated with “nice” neighborhoods. But restricting them would inconvenience only those who use them, and it would do little to make neighborhoods nicer.
Do we dare say it? WELL SAID!!
Elites versus working people
August 3, 2009 | Washington Post, alternatives, industry | Comments (0)Very interesting Washington Post story today about check cashing stores in Prince George’s County, Maryland, a middle class suburb of Washington:
“{A check cashing store is} better than the bank,” Rivas said of the Depot, which sits between a furniture store and another check-cashing store in the Hyattsville area. Rivas, a construction worker, said he paid 1 percent of his $607 paycheck because banks require “too much documents” to open an account.
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“People want to have quote-unquote ‘nice things’ in their neighborhoods, and a check-cashing place may very well be a nice entity,” said council member William A. Campos (D-Hyattsville), who proposed the bill. “Unfortunately, though, the image that it carries is not so great. And that’s something people think about when they’re looking to move into a neighborhood. . . . You don’t see check-cashing places in Bethesda.”
No, you don’t see check cashing stores in Bethesda, a wealthy town. You see them where they are needed. You also will not see a Saks Fifth Avenue in Prince George’s County, but you will in Bethesda.
“A rate cap means a ban…”
July 22, 2009 | Washington Post, federal legislation, industry | Comments (0)That’s the profound wisdom of CFSA spokesperson Steven Schlein in a Washington Post article in which an interfaith organization calls for a 10% federal rate cap:
….In May, an effort in Congress to set a 15 percent interest rate cap lead by Sen. Bernard Sanders (I-Vt.) garnered only 33 votes. However, three years ago Congress passed a 36 percent cap on loans to military borrowers after a Pentagon report documented the impact of payday loans on service members.
Lenders say a national interest rate cap would be bad for consumers.
“Payday loans are typically two weeks. A 10 percent rate cap would mean the industry could charge under 40 cents per $100 loaned for two weeks. Even a charity like Goodwill Industries charges $9 per $100 loaned for its payday loan alternative,” said Steven Schlein, a spokesman for the Community Financial Services Association of America, a trade group for payday lenders. “A rate cap simply means a ban on short-term loans.”
Shoe leather lobbying
July 7, 2009 | Washington Post, federal legislation, industry | Comments (0)That’s how the Washington Post describes the effort to block enactment of the Consumer Finance Protection Agency:
Opponents of the agency have been repeating several arguments in meetings with lawmakers and in media interviews. Business groups warn that another layer of regulation could increase costs, stifle innovation and curtail choices for consumers. They complain that an agency responsible solely for examining consumer financial products would not be concerned about the health of the firms providing them. They say the proposal would exacerbate the patchwork nature of current regulation by setting minimum federal standards that individual states could exceed.
No mention of stepping on the toes of states.
Bite of bank fees
June 28, 2009 | Washington Post, alternatives, industry | Comments (0)Has caught the attention of the Washington Post. From the front-page Sunday story:
Customers are paying more to maintain a checking account and withdraw cash from an out-of-system ATM, and when they bounce a check. To make up for declining revenue, many banks are boosting fees and are requiring higher minimum balances for many accounts.
The institutions also have made it easier for customers to spend more than is in their accounts — and then hit them with substantial fees, a practice so vexing to consumer advocates that the Federal Reserve is thinking of regulating it.
Best move the Payday Pundit ever made was joining the Congressional Federal Credit Union. (The Payday Pundit worked on Capitol Hill for many years.)
Turning partisan
June 25, 2009 | Washington Post, federal legislation, industry | Comments (0)I’m talking about the proposal to create a Consumer Financial Services Protection Agency. From today’s Washington Post:
As Congress intensified its scrutiny of the Obama plan, Republican members of the House Financial Services Committee questioned the idea of splitting consumer protection from government oversight of the banking business’ health.
Republicans lined up with the banking industry on Wednesday in attacking a Democratic proposal for a new U.S. Consumer Financial Protection Agency at a congressional hearing focused on a key component of the Obama administration’s broad plan for financial regulation reform.
Well, if this become partisan, it’s easy to predict who will win. Dems control both houses of Congress in significant numbers.
Debit cards are the future?
May 27, 2009 | Washington Post, alternatives, industry, personal finance, regulation | Comments (0)I thought they were the present. Ezra Klein, who normally blogs and writes about politics and policy, has discovered debit cards. From his Washington Post column:
Credit, with all its benefits and dangers, and convenience. But with debit cards, you can now have the convenience of plastic without the temptations of credit. I, for instance, use a debit card exclusively. And so do many others.
Well, aren’t you special.
Those last two sentences epitomize elitism. He and his friends have enough money in the bank to whip out their debit card where ever they go. Many Americans don’t, Ezra.
