jump to navigation

Fed Cracks Down on Credit Cards

April 30, 2008 | alternatives, industry | Comments (0)

This is a big development.  As this article describes, the Fed is going to bar companies from raising interest rates on card holdings barring a default from the cardholder. 

Banks are also fending off federal legislation to crack down on credit card abuses. 

Oregon’s Merkley is “strenthening” the economy (by taking jobs away)

April 30, 2008 | Jeff Merkley, Oregon, industry critics, states | Comments (0)

Jeff Merkley, Oregon legislator and candidate for U.S., is most famous for leading the charge to drive payday lending out of the state.  He seems most proud of it as evidenced by this flyer sent out by the AFL-CIO in support of his candidacy.  The Payday Pundit calls readers attention to the typos in the flyer and hopes that Merkley is not positioning himself as the “education candidate.” 

Last month, Merkley did the opposite of “strenghening” the economy and actually held an event where he celebrated lost jobs in Oregon.

Ohio update 2:

April 30, 2008 | Cleveland Plain Dealer, Ohio, industry, media coverage, regulation, states | Comments (0)

This Columbus Dispatch story provides further details.  Key passage:

Stunning both the payday-lending industry and consumer advocates, House Financial Institutions Chairman Rep. Christopher R. Widener, R-Springfield, made major changes yesterday to a plan he introduced last week that did not lower the current 391 percent rate.

Widener introduced House Bill 545, which would cap payday lending rates at 28 percent, limit borrowers to four loans per year, cut the maximum loan size from $800 to $500 and require that borrowers get at least 31 days to pay off a loan.

Ohio update: New “28%” bill introduced

April 29, 2008 | Cleveland Plain Dealer, Ohio, industry, media coverage, regulation, states | Comments (1)

This Cleveland Plain Dealer story has the latest, but payday lending lobbyist Darryl Dever sums it up nicely:

“If 36 percent puts you out of business, what do you think 28 percent is going to do?” asked Dever.

It’s amazing that given the rough time Ohio is having economically legislators would consider a bill that costs the state 6,000 jobs, millions in tax revenue, and uncountable losses to vendors, contractors and others that do business with the 1,600 payday loan stores in Ohio. 

Banks and credit unions “eternal foes”

April 29, 2008 | The Hill, alternatives, industry, media coverage | Comments (1)

Makes the Payday Pundit sad to see this, but banks and credit unions are blaming each other for scuttling federal legislation to better help credit unions compete with banks.    This article in The Hill newspaper says the bill also helps credit unions provide “alternatives” to payday loans.  From the article:

The bill would allow credit unions to offer alternatives to payday loans and to expand their geographic reach. But banks complain that, due to an overbroad definition of so-called “underserved areas” by the credit union regulator, credit unions would have free rein to lend throughout broad geographic areas like Washington, D.C., Philadelphia and Houston without requirements to serve low-income consumers.

Business loans made in such areas would be exempt from the usual credit union caps on business lending.

“They would have the ability to make unlimited business loans from Northwest Washington, D.C.,” said the vice president of congressional affairs for the Independent Community Bankers of America (ICBA), Ron Ence.

How convenient for credit unions that shortly after payday lending was effectively banned in the District of Columbia, they may get federal legislation to step into the short-term loan market in places like the District.   As the saying goes, as cynical as you are, it’s hard to keep up.

Cleveland Plain Dealer columnist taken to task

April 29, 2008 | Cleveland Plain Dealer, Ohio, Thomas Suddes, industry critics, media coverage, states | Comments (5)

Thanks to Lawrence Meyers for sharing this back and forth between himself and Thomas Suddes of the Cleveland Plain Dealer.

As is typically the case, editorial writers and columnists like Mr. Suddes have never used a payday loan, never been in a store, never spoken with a customer or an employee…yet still seem to know everything about the service, who uses it, and why.

Study Finds 4,547% Interest Rates on Bounce Protection Loans

April 29, 2008 | alternatives, research | Comments (1)

Hidden Consumer Loans: An Analysis of Implicit Interest Rates on Bounced Checks by Mark A. Fusaro, Department of Economics, East Carolina University, finds that the median interest rate on bounce protection loans is in excess of twenty times that of payday loans. 

Fusaro writes, “Payday lending attracts attention for its high interest rates, but bounce protection loans are much more expensive. When the amount borrowed is low and the time outstanding is short, the effective interest rate paid on this loan can be quite high.”

Additional findings include:

Study highlights

New York Sun: Credit cards offer less credit in black neighborhoods, Federal Reserve study says

April 29, 2008 | alternatives, industry, research | Comments (0)

An article in the New York Sun reports, “Credit card companies offer residents of majority black communities a lower credit limit than residents with the same profile who live in white neighborhoods, an economist at the Federal Reserve Bank of Boston has found.”

The study, “Credit Card Redlining”  is by Ethan Cohen-Cole.

Cole found that a 1% increase in the percentage of blacks in an area corresponds to a reduction in available credit of $123. Moreover, moving from an 80%-majority white neighborhood to an 80%-majority black neighborhood reduces credit by an average of $7,357.

M*A*S*H and payday lending and Ohio

April 29, 2008 | Ohio, industry, positive media coverage, regulation, states | Comments (0)

In a new post, M*A*S*H 4077 and M*E*S*S HB 333, The Wandering Heretic discusses an episode of M*A*S*H and efforts in Ohio to legislate payday lenders out of business. A few excerpts:

This Emmy winning episode reminds me in many ways of the Ohio pastors’ efforts to pass HB 333; a law which will in essence shut down the Payday Lending institution in the State.

If the Ohio pastors feel that high interest rates are oppressing the poor (to use their exact words) then they should not appeal to Caesar to pass laws; instead, they should get involved in the process themselves. By getting involved in the process I don’t mean the legal or legislative process; I mean the Payday Lending process. If the Payday Lenders are charging usurious interest rates in order to make oppressive profits on the backs of the poor (an assertion I reject, by the way); then the church should not seek to interfere with the lenders using the State. Instead, if a church is called to this mission of limiting such interest, then they should open their own lending office charging rates that they feel are just.

The major downside of this approach is that it will involve a lot of work on the part of the church. They will have to find funding sources for their operations, find people to staff the operations, get the legal advice necessary to create the appropriate documents and contracts, procure the office locations—even if they are church buildings—and make then secure. In short, they will have to incur all of the hassles and expenses as do the payday lenders themselves.

In that way, and only in that way, will the church avoid being the high flying bombardier, appealing to Caesar to pass laws like Hathaway dropped bombs, remaining clean and separate from the explosions they will cause. Instead, it will be the M*A*S*H surgeon on the ground, working for healing. But this will take work, hard and long term, sometimes frustrating, work. However, if the churches as a whole are not willing to get involved and get their hands dirty on that level, then they should get out of the way and let the Payday lenders do their jobs.

Payday Pundit just searched for the M*A*S*H theme song and found some interesting videos on you tube.

Payday Pundit’s favorite “stalker”

April 29, 2008 | South Carolina, The State, Warren Bolton, industry, industry critics, media coverage, regulation, states | Comments (0)

That would be Warren Bolton of the State Newspaper in South Carolina.  By far, Warren Bolton has written more anti-payday lending stories of anyone in the country: almost 40 over the past few years.   Like many “progressive” elitists, Bolton believes that citizens aren’t wise enough to make their own personal choices, but need guidance from their betters.   And any legislator who doesn’t take direction from Bolton is opposing the will of the people, which only Bolton knows. 

As an editor and columnist, Bolton is expected to offer opinions on issues affecting the paper’s readership.  But his personal jihad against the payday industry is unique; it’s obsessive, vehement, and scary.   That’s why we think of him as a ”stalker.” 

And we’re not the only ones who have problems with Bolton.   Check out this this old link  on “Warrin” Warren.

 

« newer posts — older posts »