“distortions and misrepresentations”
October 20, 2009 | Daily Press, Virginia, industry, positive media coverage | Comments (0)In a newspaper? Who’d believe it? An Advance America executive said this in today’ Virginia Daily Press:
During our eight years as a licensed lender in Virginia, Advance America has demonstrated a strong record of compliance. We steadfastly believe that a regulated financial environment is in the best interests of our customers.
But I believe that further regulations to restrict short-term lending in Virginia — as your paper advocates — will simply reduce the supply of credit and make borrowing more expensive for consumers. Many consumers will be forced to confront rapidly increasing bank and credit union fees for overdraft protection. Still other consumers will likely turn to unregulated lenders, including those offering loans exclusively over the Internet.
New ODP legislation
October 19, 2009 | Wall Street Journal, alternatives, industry | Comments (3)From the Wall Street Journal:
Five U.S. Senate Democrats, including Senate Banking Committee Chairman Christopher Dodd, D-Conn., on Monday introduced legislation that would put sharp restrictions on the fees bank can charge customers. Customers would have to opt-in to overdraft protection, and banks would be limited on the size and frequency of the fees they charge.
“Banks should not be trying to bolster their profits at the expense of their customers,” Dodd said in a statement.
Minnesota Rep. backs CFPA
October 18, 2009 | Minneapolis Star-Tribune, Minnesota, industry | Comments (0)It’s neither here nor there, but the Vikings lucked out today. Ravens’ kicker missed a 45 yard field goal on game’s last play. Congressman Keith Ellison, however, thought this oped in the Minneapolis Start Tribune would be read on football Sunday:
The most abusive and predatory lenders were not federally regulated. More than 50 percent of the subprime mortgage loans made in 2005 and 2006 were originated by lenders not subject to federal supervision. Mortgage brokers, finance companies and payday lenders made toxic home and consumer loans with few limits — loans with little or no documentation — commonly known as “liar loans.”
Okay, then clean up the mortgage mess and leave payday lending alone. We had nothing to do with the financial meltdown.
Wisconsin update:
October 16, 2009 | Capital Times, Wisconsin, industry | Comments (0)From a column in today’s Cap Times:
After being lavished with campaign contributions and buttonholed by an army of lobbyists, enough of our state legislators are apparently going to make sure Wisconsin remains the only state in the nation that doesn’t regulate an industry that lends money for two weeks at a time, frequently extends balances for big fees, and winds up getting as much as 520 percent interest on its loans.
Classic sour grapes from people on the losing end of a legislative fight. They can never convince themselves that they lost on the merits.
CFSA responds to Washington Post story
October 13, 2009 | Washington Post, federal legislation, industry | Comments (0)The Washington Post story, “‘Unbanked’ but No Longer Ignored,” included critical errors that require a correction, said the Community Financial Services Association of America (CFSA) in a release today.
“These inaccuracies are significant because the story purports to be about unregulated financial services whose customers are ‘unbanked,’” said D. Lynn DeVault, CFSA President. “Payday lenders do not fit into either category.”
“Unbanked”?
October 13, 2009 | Washington Post, federal legislation, industry | Comments (0)Sloppy journalism at The Washington Post. In an article today about the CFPA affecting payday loans and check cashers, the reporter confuses the two services:
In the financial world, those without access to traditional financial services have been dubbed the “unbanked.” With spotty bank records and thin or nonexistent credit reports — documents often required to rent an apartment, buy a cellphone or even get a job — they rely on storefront businesses that may charge a 4 percent fee to cash a check or a 995 percent annual interest rate for a short-term loan.
The story goes on to describe a worker who lives and works in North Carolina and Washington, DC (two jurisdictions without payday lending) as using payday loans. Very suspicious.
No
October 11, 2009 | NPR, federal legislation, industry | Comments (0)NPR had a story this weekend about the CFPA possibly losing steam. I just don’t see it. It has a lot of momentum.
Intensity
October 9, 2009 | Wall Street Journal, federal legislation, industry | Comments (0)Wall Street Journal’s take on President Obama’s event today:
President Barack Obama will step up his push for a financial regulatory overhaul Friday, with a call for the public to rally behind his proposed Consumer Financial Protection Agency
The agency, a key plank in Obama’s proposed regulatory revamp, has come under fire from Republicans and the banking sector, which says it would crimp the flow of credit to consumers and limit the creation of new products. But Obama and top Democrats on Capitol Hill say the agency would help avoid a relapse of the financial crisis and safeguard consumers from some of the practices that contributed to the meltdown.
An administration official said Wednesday that Obama will defend the proposal at a White House event Friday and press lawmakers to pass the reform package by the end of the year. He will be joined by Treasury Secretary Tim Geithner, and meet with four people the White House says have been hurt by outdated financial regulations.
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“Transparent”
October 5, 2009 | USA Today, alternatives, industry | Comments (0)CFSA’s D. Lynn DeVault has a strong letter in USA Today’s online edition today:
USA TODAY’s article “Anger at overdraft fees gets hotter, bigger and louder” rightly points out that payday loans are often less costly than so-called overdraft protection.
Payday loans offer additional benefits over bank overdraft fees because the cost of the loan is transparent and easy to understand, and all of our customers choose to take out the loan, rather than being automatically enrolled. Payday loans typically cost $15-$17 per $100 borrowed, due on the borrower’s next payday. Member companies of the Community Financial Services Association of America post these fees in large print and ensure that customers understand the cost before making the loan.
In his research, Gregory Elliehausen of George Washington University called payday loans “a simple product.” He found that “nearly all payday advance customers are aware of the finance charges for their most recent new payday advance.” In contrast, many do not know that they are enrolled in overdraft protection or when a transaction triggers a fee.
Payday loan customers can use overdraft protection for short term credit instead of a payday loan, but they choose payday loans. Elliehausen found that “nearly half (of payday loan customers) considered other sources of credit before obtaining a payday loan.”
Payday loans’ transparent, easy to understand, opt-in fee structure is one of the reasons that customers consistently choose payday loans and report satisfaction with the product.
CFPA hearing coverage
October 1, 2009 | Washington Post, federal legislation, industry | Comments (0)Washington Post sums it up:
For more than three hours Wednesday, supporters and opponents of a new federal agency that would oversee mortgages, credit cards and other consumer financial products dug deeper into their trenches in Room 2128 of the Rayburn House Office Building.
