The "400 Faces" Campaign Launches
Efforts to rein in the payday lending industry may have stalled in Springfield last month, but the battle in Washington is just heating up. After holding a hearing in April, Rep. Luis Gutierrez will likely bring his Payday Loan Reform Act of 2009 up for a committee vote this ...
Efforts to rein in the payday lending industry may have stalled in Springfield last month, but the battle in Washington is just heating up. After holding a hearing in April, Rep. Luis Gutierrez will likely bring his Payday Loan Reform Act of 2009 up for a committee vote this session. And there are rumors that Sen. Dick Durbin's more comprehensive anti-usury bill might be moved as part of a larger finance reform package being assembled by Senate Banking Committee Chairman Chris Dodd (D-Conn.).
To be sure, both lenders and consumer advocates are gearing up for a lobbying push. As we noted last week, representatives from the online payday lending industry are already leaning on legislators to reject any interest rate caps on the short-term loans. As a counterweight, the Center for Responsible Lending has unveiled a new campaign titled "400 Faces," which aims to show "the media, lawmakers, and the general public how this so-called service is nothing but a scam." The organization is collecting stories from those who have been caught in a payday lending debt trap and posting short documentaries on YouTube. Here is their first:
Activists opposed to Gutierrez' bill, which Stephen Colbert lampooned on his Comedy Central show in April, have also created a Facebook group "Stop H.R. 1214." That can be reached here.
Share
The CRL wants us to keep our eyes on these 400 faces, and off the 400,000 faces of the foreclosed. What's being done about them? How is this trite film going to make a difference for people losing their homes? I want to refinance my mortgage, I can't even find the bank that now owns it, it's been sold off so many times. But the CRL is demanding action and protection for people that can’t even manage a $100 loan? Something is very fishy here… like red herring fishy.
Ask Yourself: If an individual elects to use a payday loan of their own fruition - are they trapped?
If an individual is limited to borrowing 1/4 of their monthly income - are they trapped?
If an individual may access an extended payment plan once each year with NO ADDITIONAL FEES that allows them to make four equal installment payments over 8 weeks rather than a single payment after two - are they trapped?
If an individual finds themselves short on cash after paying back their original loan, but is not restricted from borrowing less (as little as $50) in subsequent loans - are they trapped?
Let's examine the true hypocrisy behind the Center for "Responsible Lending"
visit www.irresponsiblelending.org or read the following...
In 2002, the Self-Help Credit Union established the Center for Responsible Lending, the leading critic of bank overdraft protection, credit card fees and payday loans.
Cape Fear, Scotland Community and Wilson Community Credit Union are all divisions of the Self-Help Credit Union and, ironically, offer similar credit products to those that the Center for Responsible Lending seeks to ban. Conveniently,however, they are not regulated under the same laws and would continue to offer and expand their lines of products...
Overdraft Line-of Credit
Loan Amount $100
Fee $25
APR on 1 day loan: 9125%
APR on 3 day loan: 3333%
APR on 14 day loan: 651%
APR on 30 day loan : 333%
Overdraft Line-of Credit
Loan Amount $250
Fee $25
APR on 1 day loan: 3650%
APR on 3 day loan: 1216%
APR on 14 day loan: 260%
APR on 30 day loan: 121%
Overdraft Line-of Credit
Loan Amount $500
Fee $40
APR on 1 day loan: 2920%
APR on 3 day loan: 973%
APR on 14 day loan: 208%
APR on 30 day loan: 97%
For example, Self-Help-affiliated credit unions offer Overdraft Line of Credit to their members who have checking accounts and qualify under the approval guidelines.
The line of credit covers non-sufficient funds transactions, with the credit union offering loans in increments of $50 (minimum $50; maximum $500). For this service, the customer pays a monthly fee of either $25 or $40, based on amount of credit used. For overdraft loans up to $250, the fee is $25. For loans up to $500, the fee is $40.
As seen in the chart above, when calculated as an annual percentage rate, as the Center for Responsible Lending advocates, the interest rates range from 97% APR to $9125 APR, depending on when money is depositing into the account and the loan is repaid. Typically, the repayment occurs with the next deposit into the account.
Short-term lenders simply are responding to consumer demand and seeking a level playing field. CRL wants government to give Self-Help a monopoly!
This is a state issue. Other financial products primarily regulated by the FEDERAL government are responsible for the falling economy. Keep this a state regulated entity so that local legislators who have their finger on the pulse of their respective communities can create a regulatory scheme that fits the consumers' needs.