Nonprofit’s motives questioned after $15M donation
March 25, 2008 | Center for Responsible Lending, North Carolina, industry critics, states | Comments (0)Business Journal of the Greater Triad Area of North Carolina reports on the Center for Responsible Lending.
“The good guy image of the Center for Responsible Lending, a Durham nonprofit that has emerged as a high-profile advocate on consumer issues, is being scuffed up by a $15 million donation from hedge fund investor John Paulson.
Paulson and his New York-based Paulson & Co. have made billions by short- selling subprime mortgage-backed securities, an investment strategy that bets the price of the securities will head downward.
At issue now is an effort in which the Center for Responsible Lending, or CRL, lobbied on behalf of a change to U.S. bankruptcy law that would give bankruptcy judges the authority to lower the values of first-time mortgages in the settlements they write in cases that come before them.
The power, currently being debated in Washington, D.C., while a boon to consumers, would lower the value of the bond packages that include these mortgages — a benefit to investors who take short positions.
Read full article (BizJournal subscription required).
Motley Fool weighs in on “overreaching” AGs
March 25, 2008 | Arkansas, Motley Fool, industry, media coverage, positive media coverage, regulation, states | Comments (0)The Motley Fool, which periodically comments on happenings in the payday lending industry, has this to say about recent developments in Arkansas. There are still some sensible observers out there.
“Arkansas’s attorney general wants to shut down payday lenders in his state, and he’s sent letters to some 60 companies doing business there, telling them to pack up, ship out, and — oh yeah! — forgive all the debts of the people who borrowed money from them…For individuals needing small bridge loans — well, tough luck! You can’t have one.
The credit snobs
March 24, 2008 | Virginia, positive media coverage, states | Comments (0)Alex Tabarrok, an associate professor of economics at George Mason University, has an excellent piece on Marginal Revolution “The Credit Snobs”– referring to those who believe “credit is something only the rich can handle.” He concludes, “The democratization of credit worries the credit snobs. The credit snobs fear that capitalism isn’t just for the rich.”
If you’ve got two minutes, read his post. Well put Mr. Tabarrok.
New study: Payday loans help in times of natural disaster
March 24, 2008 | Illinois, industry, positive media coverage, research, states | Comments (0)Communities affected by natural disasters are more resilient and less likely to face foreclosure if they have access to payday loans, says a working study, “Payday Lenders: Heroes or Villains?” by researcher and University of Chicago faculty member, Adair Morse.
From the press release:
The study finds that payday lenders provide critical capital to people in disaster-struck communities. Morse found that banks and other forms of credit were no substitute for payday loans, “…banks cannot serve the welfare-enhancing role for individuals in distress that payday lenders serve.”
“My results have important policy implications,” concludes Morse. “If the existence of payday lending is valuable for those facing personal disaster in a way that other financial institutions cannot provide, then regulators should strive to make access to finance easier and more affordable, not ban it,” Morse wrote, “…if payday lending is welfare improving for at least some portion of the population, a move to ban payday lending is ill advied.”
Blogger criticizes media coverage of payday lending
March 24, 2008 | California, positive media coverage, states | Comments (0)Obviously inspired by today’s Reuters story on payday lending, Luke Ford, a blogger out of Los Angeles, wrote this today:
Memo To Mainstream Media
“If you want to constantly attack payday loans, then abandon any pretense to journalistic objectivity. The articles recently published about this matter, all of them vilifying the practice of payday lending, fail even the most basic standards of decent reporting. Where are the testimonies – yes, such accounts readily exist – from people who need these short-term loans? This evidence in support of payday loans, narratives from people of diverse economic backgrounds (additional memo to MSM: payday loans are a source of relief for individuals of all incomes), never seems to make it into articles from, say, the New York Times or Washington Post. The reason: the proverbial media establishment wants to destroy payday lending. Save that agenda for the editorial page. In the meantime, reporters need to uphold the standards of their profession — which means writing balanced pieces that respectfully offer data from the other side. And here’s another “radical” suggestion: newspapers should spend less time on this blatantly political cause, and focus their energy on some genuinely incompetent financial institutions. A crazy idea, I know.
Half of Americans living paycheck to paycheck
March 24, 2008 | customers, industry, research | Comments (0)|
Results from a survey by American Pulse found that 50.8% say they live paycheck to paycheck. |
Not having a credit record doesn’t mean you’re a bad risk
March 24, 2008 | Texas, customers, industry, research, states | Comments (0)Pamela Yip, columnist at the Dallas Morning News, has an interesting column today about the 40 million Americans who are “underbanked.” Here’s a key passage:
“Some underbanked consumers have bad credit. Others may just have little or no credit history.
“That doesn’t necessarily mean they’re a bad risk,” said Jennifer Tescher, director of the Center for Financial Services Innovation in Chicago, which studies the underbanked market. “It means we don’t know what risk they are because we don’t have data about them.”
This guy calls himself a journalist?
March 23, 2008 | Center for Responsible Lending, Reuters, industry critics, media coverage | Comments (0)Nick Carey of Reuters wrote this piece of bad journalism connecting payday loans to the housing crisis. What’s his evidence? The Center for Responsible Lending says so,; not even in one of their phony studies, but based on a few anecdotes. He also had time to find SEVEN critics of the payday lending industry, but didn’t have time to find even ONE industry spokesperson or supporter. Reuters is allegedly a “news” service, but we’ll use the standard set by Nick Carey and form our own opinion based anecdotes: Reuters is a propoganda outlet for anti-business zealots.
Columnist slams bank fees
March 21, 2008 | alternatives, industry | Comments (0)Liz Pulliam Weston at MSN Money pulls no punches. According to the column:
Late payments and exceeding your credit limit have almost tripled in the past decade. Bounced-check fees now average close to $30 — with some banks charging as much as $45 for an NSF (nonsufficient funds) draft.
|
Late fee |
Overlimit fee |
|
|
1994 |
12.55 |
12.75 |
|
1995 |
13.25 |
13.2 |
|
1996 |
14.21 |
13.94 |
|
1997 |
19.24 |
18.44 |
|
1998 |
22.1 |
21.14 |
|
1999 |
25.61 |
24.96 |
|
2000 |
27.1 |
25.99 |
|
2001 |
28.29 |
26.88 |
|
2002 |
30.04 |
27.89 |
|
2003 |
31.44 |
29.23 |
|
2004 |
32.61 |
30.35 |
|
2005 |
34.42 |
31.22 |
RightRunner Blog: Politicians should work on real problems
March 21, 2008 | Ohio, industry, positive media coverage, regulation, states | Comments (0)RightRunner writes, “I suppose some politicians would rather distract us with this type of thing [payday loans] instead of working on our real problems.”
RightRunner posts a great quote from the Buckeye Institute:
“The attacks on payday lending do not bear up under scrutiny. Instead of wasting time on this issue, legislators should focus on the real financial problems facing Ohio. These problems do not come from payday lenders – they come from the high taxes and high government spending that is dragging down the state economy. If they truly want to help financially-strapped Ohioans, the state’s outdated tax code is a much better target than a few businessman offering short-term loans.
Well said.
