“Ignorance”
October 27, 2009 | California, industry | Comments (0)Larry Meyers ain’t happy with the Long Beach Press Telegram:
The Long Beach Press Telegram demonstrates the usual ignorance with regards to payday loans. Payday lenders no more “target” low income neighborhoods than fast food chains “target” truckers at exits on interstate highways. The Telegram perpetuates the already disproven myth that minorities take out more payday loans than non-minorities. They mention a “study” that allegedly shows correlation between PDL borrowers who get loans and subsequently file for bankruptcy without ever citing the specific study by name.
They claim the rates are “extortionist” without ever placing the flat fees charged in context with other forms of short-term credit, such as ODP/NSF fees, which are three times more expensive. This foolish editorial mentions that in states where PDLs have been banned, the CRL – itself a dubious organization – is a good thing, failing to mention that more than one real non-partisan study, which I cite here by name, says exactly the opposite. The Telegram also claims that “hundreds of commercial banks and credit unions offer similar small loans at reasonable rates”.
Editorial writers have a history of leading with their ideology, not facts. This is true of their coverage of many industries.
“Picking on payday loans will backfire”
October 26, 2009 | Mississippi, industry, positive media coverage | Comments (0)Great editorial out of Mississippi:
Here are their options: Pay overdraft bank fees of $40 a check. Miss a credit card payment that triples their interest rate for a year. Miss a utility payment and incur reconnect charges of $50 or more per utility.
Suddenly, the $22 title check fee seems like a smart transaction. Indeed, that option is at least half the cost of the other alternatives.
In fact, the average payday loan customer is 39 years old and makes $41,000 a year. They are making a rational business decision that saves them money.
Many people with decent jobs live paycheck to paycheck. They have families to feed and bills to pay. Most have a budget, albeit tight, that works each month.
But from time to time, the unexpected strikes. A transmission needs replacing. An air-conditioning compressor blows. A medical expense crops up. They are short of cash.
Word on the street
October 26, 2009 | federal legislation, industry | Comments (0)CFPA will head to House floor mid-November, be finished before Thanksgiving break.
What’s the CFPA gonna do?
October 26, 2009 | federal legislation, industry | Comments (0)According to this WSJ blog:
According to the draft legislation, Treasury’s plan would:
- 1) Give the agency broad authority to write rules about services or products including:
a. Deposit-taking activities
b. Extending credit and servicing loans (this could include mortgages, credit cards, etc.)
c. Check-guaranty services
d. Collecting, providing, or analyzing consumer report information
e. Providing real estate settlement services, including title insurance
f. Leasing personal or real property
g. Investment advisers that aren’t already regulated by the CFTC or SEC
h. Processing financial data
i. Sale or issuance of stored value cards
j. Acting as a money service business
k. And any other activity the agency defines as a rule, except for most types of insurance, which are exempt.
28 cents overdrawn
October 26, 2009 | alternatives, industry | Comments (0)The former jack-of-all trades, truck driver and construction worker said he is big-time peeved that he was hit with a $39 overdraft fee by Citizens Bank, not once but twice.
Scherff made a purchase with his debit card for $5.29. The balance in his account at the time was $5.01, causing him to be overdrawn by 28 cents.
CFPA toothless?
October 26, 2009 | federal legislation, industry, regulation | Comments (0)Not from where I sit, but the AP says this:
Hints of looming pitfalls for a new consumer agency were evident in the debate this week before the House Financial Services Committee. Even there, where the president’s party holds a 42-29 edge, Obama didn’t get all he wanted. Up until the end, White House aides buttonholed individual members, fighting unsuccessfully against yet another exemption to the powers of the proposed consumer protection agency.
The panel’s chairman, Massachusetts Rep. Barney Frank, acknowledged later that of all the aspects of financial regulation that he is contending with, the consumer agency was politically the most difficult. Indeed, consumer advocates applauded him for preserving as many consumer protections as he did.
Still, Travis Plunkett of the Consumer Federation of America called the bill “battered and bruised.”
Absurd
October 26, 2009 | California, alternatives, industry | Comments (0)Check the first line of this editorial in the Long Beach Press Telegram:
If you thought you had a choice, would you take out a loan with an annual interest rate of 400 percent?
Is it the contention of this paper that people in California don’t have overdraft protection, title loans, installment loans, pawn shops and family to borrow from?
“unfairly attacked’
October 26, 2009 | Alabama, industry | Comments (0)Payday lenders responds to the Montgomery Advertiser:
There is clearly no way payday lenders can sensibly be blamed for the ills mentioned by the Alabama Poverty Project. There is also no way for a consumer to reach the much-hyped triple-digit interest rate mentioned in the column because a loan cannot be extended for a full year. It is unfair to judge short-term, two-week loans on an annual percentage basis.
Other alternatives to payday lending do not stack up either. Not everyone can turn to a family or friend for an emergency loan. Credit cards, the solution touted by the Alabama Poverty Project, come with steep fees that far exceed the price of a payday loan.
Interesting debate
October 25, 2009 | federal legislation, industry | Comments (0)Experts weigh in on the CFPA.
Credit tightening
October 25, 2009 | federal legislation, industry | Comments (0)From the story:
Taking home a new couch is not as easy as it once was.
That’s according to Louis Mohana, who says customers at the Bourg store that bears his name are having a harder time securing loans to buy furniture.
“We’ve seen it tighten up,” said Mohana.
At Bob Watts Furniture in Houma, loans are still readily available, but lenders are asking for more sources of identification, sales associate Kim Watts said.
Congress has created new laws meant to crack down on the unstable mortgage loans and deceptive consumer-credit practices that economists blame for the current national recession. But local and state financial professionals say they are fearful that the laws could have the unintended consequence of making it more difficult, time-consuming and expensive for consumers to borrow money.
That’s what bad regulations can do, make things more time-consuming and expensive.
