New Ohio website rolling out
July 31, 2008 | Ohio, regulation | Comments (0)Tomorrow or this weekend, The Reject H.B. 545 Committee will have a new website, Ohioans4financialfreedom.org. When the website goes live, we’ll let you know.
The Pundit gives a primer on the First Amendment
July 30, 2008 | Virginia, regulation | Comments (2)The Daily Press in Virginia wrote a snarky editorial today under the headline “This Explains It” denouncing the lobbying activities of various interests, including payday lenders. Money quote:
Lobbyists spent a record amount — $20 million in the last year — trying to influence the Virginia General Assembly. That would account for the way some things went.
In one fell swoop, the paper accuses all the members of the Virginia Assembly of corruption, and, all the lobbyists and campaign contributors of having bad motives.
Of course, they can criticize, pontificate, and impune the character of anyone they want. Newspapers are protected by the First Amendment to the Constitution. BUT, so is lobbying. Under that same First Amendment, there is a right of the people to “petition the Government for a redress of their grievances.” This is held by most constitutional scholars to protect the rights of lobbyists.
Of course newspapers also spend money to influence the legislature. They pay editorial writers and devote valuable newspaper space to this purpose. And when a legislature is considering legislation that will affect the news business–Internet rules, copyright laws, political advertising rules–they hire lobbyists and make sure they are heard.
The First Amendment is a great thing. It would be nice if newspapers respected it in full, not just embrace it when it suits them.
Credit card spending down
July 30, 2008 | alternatives, customers, personal finance | Comments (0)As this report details, American across all age groups are only using credit cards for essential items:
Thirty-seven percent of consumers said they have reduced spending on credit cards, while just 10 percent said they are spending more, according to the study released on Wednesday by Javelin Strategy & Research of Pleasanton, California.
Meanwhile, 54 percent of consumers said they plan to spend less on “discretionary” or luxury items, while a mere 5 percent plan to spend more. The percentages of consumers spending less were even higher among consumers aged 35 to 64.
And 57 percent said they are “more careful” about eating at restaurants, where bills are often paid with plastic.
The Payday Pundit is wary of studies like this because one person’s “discretionary item” is another person’s “essential item.”
Save $500 a month?
July 30, 2008 | alternatives, personal finance | Comments (0)Nothing wrong with that. Some smart tips from ConsumerReports.org via Yahoo. Not to beat a dead horse, but here’s one tip:
Stop Paying Bank Fees
Average savings: $25
The American Bankers Association says 52 percent of consumers spend nothing on bank fees each month. But somebody’s paying fees, and lots of them, because the Federal Deposit Insurance Corp. says banks collected $39 billion in account fees and penalties last year. That works out to an average of $28 per month per household. But with some planning, you can pay zero.
Rewarding banks for doing business
July 30, 2008 | California, alternatives | Comments (1)The James Irvine Foundation in San Francisco gave five of its annual awards to a group of people who run “Bank on San Francisco.” This is a group that recruits banks and credit unions to offer low-cost bank accounts to low income people. A laudable program to be sure. But the reasons the Foundation gave these awards are somewhat troubling:
There are 50,000 “unbanked” households in San Francisco that lack access to basic financial services and lose their hard-earned money needlessly to check-cashing outlets and payday lenders when they could be building assets. (There are more check-cashing and payday lenders in San Francisco than Starbucks and McDonald’s combined…)
Wow. Also: no. The “unbanked” are not dependent on payday lenders because consumers of payday loans must have a checking account. And as for the tired line about check-cashing businesses versus McDonald’s and Starbucks… if you’ve ever been to San Francisco you know this cannot be true.
If we take away the reasoning for the award — that payday lenders are preying on the “unbanked” — it looks like the James Irvine Foundation has recognized some bankers for doing their jobs, namely offering their services to consumers.
Ohioans for “individual responsibility”
July 30, 2008 | alternatives, industry, personal finance | Comments (4)It would have been nice to hear more of this during the payday lending fight in Ohio, but we’re pleased nonetheless with this Chillicothe Gazette story. In discussing the current economic situation, the editorial page editors write:
Also to blame are those Americans who may have been unrealistic, turned a blind eye or overestimated their own personal financial situation when applying for such tools as mortgages and adjustable rate loans or multiple credit cards. When the rates adjusted, disaster struck.
Payday lenders offer consumers a financial choice that is largely beneficial to the vast majority of customers. Yet the media continues to trot out rare examples of customers who misused the service or shouldn’t have sought a payday loan in the first place. Yes, “individual responsibility” is important.
More false reasoning and bad information in Virginia
July 30, 2008 | Virginia | Comments (0)Opponents in Virginia still can’t get over the fact that they failed to eliminate the payday loan industry — killing jobs and destroying a viable financial option for some people. These opponents are searching for any reason for the defeat… any reason other than the simplest: the people of Virginia wanted to hang onto the option of using payday loans. And for once, a legislature listened.
But that’s not the right answer for the opponents. As demonstrated on the Daily Press website today, critics of the payday loan industry are now blaming the amount of money the payday loan industry was able to spend to educate legislators and the public. The problem is, the critics still don’t have their facts straight:
By the time the legislative dust settled, though, what started out as an effort to cap the interest lenders could charge at 36 percent turned into a bill that let them increase their charges — so the effective interest rate on a two-week loan is now a mind-boggling 592 percent.
No. If by “effective interest rate” the author means ridiculous and unfair application of APR, then she’d be correct. But the term-specific interest rate (for two weeks) would be closer to $15 per $100, which is 15%. To reach the APR a person would have to renew the same loan 26 times, which is illegal in most states. Payday Pundit is beginning to think the critics of payday loans are intentionally mistaking the facts. They wouldn’t do that, would they?
A good trend
July 30, 2008 | alternatives, industry, local issues, personal finance | Comments (0)Local news outlets are beginning to investigate bank fees. This story out of Houston is typical:
Investigative reporter Amy Davis shows you the hefty overdraft fees banks are charging consumers even when they’re not overdrawn.
“What they charged me for was for a check that had already cleared my bank,” Fisher told Davis.
One roll of the dice can make you a millionaire in the game of Monopoly. But mother Shelly Fisher lost big, not at the board game, but at her bank.
“I noticed that they charged me a $35 overdraft fee, but I had no negative balance,” said Fisher.
Shelly is her family’s money manager; but what a Bank of America employee told her might confuse even the most careful banker.
The Payday Pundit wonders why CBS Evening News isn’t reporting on bank fees.
“…payday loans agencies are an option for many of us.”
July 29, 2008 | Michigan, customers, industry, positive media coverage | Comments (0)This fair-minded and articulate news article on WLUC in Upper Michigan makes a great point:
Payday loan institutions can also mean good news for those with damaged credit. Not only is it easier to get approved for a smaller loan, but most cash advance agencies can actually help you re-establish credit. Many locations offer rechargable credit cards endorsed by major companies and will also provide letters of recommendation for customers in good standing who are looking to make larger purchases outside the scope of payday lenders.
The Payday Pundit is glad to see some reporters taking the time to learn about the payday loan service and writing sensible articles.
Efforts to ban fast food in Los Angeles sounds familiar…
July 29, 2008 | industry, regulation | Comments (0)While this has nothing to do with payday lending, Payday Pundit readers will find this AP story to be very familier. Replace “fast food” with “payday lenders” and you’ll see the ridiculousness of it. More elected officals using reverse Field of Dreams logic. If you ban it, they will come…
Storyline goes something like this:
Elected officials don’t like that fast food. They see think the communiy has “an extreme shortage of quality foods.”–To that end, they want to impose a moratoriam on fast food so the city can “attract restaurants that serve healthier food.” They claim the moratorium will help them lure restaurateurs and grocery retailers to area.–The industry association responds by saying that sit-down restaurants don’t want to go in. If they did, they’d be there. This moratorium isn’t going to help them relocate.”
Whether discussing restaurants or short-term credit, aren’t people better off if they have MORE choices, not fewer?
