The payday lending industry is evolving, but its newest products may simply provide consumers with a different route into a money hole.
Payday lenders are increasingly turning to installment loans, with all of Americas biggest payday lending companies now selling the products, according to new research from Pew Charitable Trusts. Instead of requiring repayment of a loan within days or weeks, these products are repayable over several months.
On the face of it, these loans may seem like a better deal for borrowers because they provide more time to repay the lender, and consumers tend to prefer an installment payment structure, Pew found. Yet the foundation is warning that the installment loans carry many of the same hallmarks of the traditional payday loans, such as sky-high interest rates. And lenders are shifting to installment loans partly because the products sidestep some state regulations and the Consumer Financial Protection Bureaus (CFPB) proposed payday lending rules.
Lancaster poverty commission to hear Thursday about Richmond, Va.’s push to end segregation, reduce poverty
Thad Williamson, an associate professor at the University of Richmond, was the principal author of Richmonds poverty commission report. While on leave from the university, he was the first director of Richmonds new Office of Community Wealth Building.
Payday loans are a Wall Street/financial industry scheme/scam that preys on people with low incomes. The Consumer Financial Protection Bureau (CFPB) is working on rules to reign this in and protected Americans. They want to hear from you. Please join the fight by clicking here to send a comment to the CFPB in support of a strong rule.
A Last Week Tonight with John Oliver segment on auto lending, which is similar to payday lending.
Loans Used To Be Safe And Boring
The financial industry and the loans they made used to be regular and boring – all about evaluating risk. They would look at a borrowers financial situation and at the proposed use of the borrowed funds and decide how risky a loan might be, and price the loan (come up with an interest rate) accordingly. If the risk was just too high they wouldnt make the loan at all.
Another thing that used to be was the old saying that you couldnt get a loan unless you didnt need the money. This actually made sense because getting a loan was supposed to be for a purchase that might be larger than you can handle all at once but that enabled you to increase your ability to pay back the loan. Buying a car meant you could get to work. Buying a house meant you could stop paying rent. A college loan meant you could get a higher-paying job. Expanding a business meant making more money that can be used to pay off the loan. You werent supposed to be able to get in over your head.
A loan certainly was never about getting money just to get by for another few weeks. (You used to have to go to the mafia for that, and everyone knew you could get your legs broken if you did.) Usury laws made sure people couldnt legally get in over their heads by limiting the interest rate that could be charged so if a borrower was high-risk the lender couldnt legally price the loan accordingly by charging a high enough interest rate to make it worthwhile.
Then Came Financial Deregulation
With financial deregulation a different, much less boring kind of loan industry sprang up: payday lending. Instead of evaluating risk in order to block loans to people who couldnt pay the loan back, the payday loan industry tries to find poor, desperate people, dangles loans in front of them, and then traps them into a cycle that drains them of everything.
The debt trap is the actual business model, and they say so.
One payday loan CEO said of their “customers”: “The theory in the business is [that] you’ve got to get that customer in, work to turn him into a repetitive customer, long-term customer, because that’s really where the profitability is.”
Another payday lender even put out a training manual for new employees, saying to employees that their job is to push borrowers from one payday loan to the next.
The chairman of the payday lender-supported Consumer Credit Research Foundation and president of the Payday Loan Bar Association wrote an email saying, “In practice, consumers mostly either roll over or default; very few actually repay their loans in cash on the due date.”
Payday lenders can find lots of desperate people in todays low-wage America. A survey from Bankrate.com showed that as many as 63 percent of Americans would be strapped to raise $500 if they needed it in a crisis.
There are plenty of people who are unbanked (do not have a bank account) or underbanked (can’t otherwise get a loan). So they look for another way to get a loan in an emergency or cash a paycheck. According to the 2013 FDIC National Survey of Unbanked and Underbanked Households, 7.7 percent (one in 13) of households in the United States were unbanked in 2013. This proportion represented nearly 9.6 million households. On top of that, 20.0 percent of US households (24.8 million) were underbanked in 2013, meaning that they had a bank account but also used alternative financial services (AFS) outside of the banking system.
More Facts And Figures
This year the National Council of LaRaza and The Center for Responsible Lending looked at the situation just in Florida and released a report titled, “Perfect Storm: Payday Lenders Harm Florida Consumers Despite State Law.” According to the report,
? Interest rates average 278 percent.
? In Florida there are more payday loan stores than Starbucks (more than 1,100 outlets vs, 642 Starbucks).
? Payday lenders “stripped” Floridians of over $2.5 billion in fees between 2005 and 2016.
? “Last year, over 83 percent of Florida payday loans were to Floridians stuck in 7 or more loans.”
? “The average borrower takes out more than 8 loans per year.”
? “The economic drain of payday lending is disproportionately concentrated in Florida’s black and Latino communities, and has seen significant growth among senior citizens.”
That was Florida. Here are some national facts from Americans for Payday Lending Reform (a project of People’s Action):
? Thirty-five states allow payday lending with an average of 300 percent APR or more on a two-week loan. [Philadelphia Inquirer, 6/23/13]
? CFPB: 80 percent of payday loans are rolled over into new loans within 14 days. [Yahoo Finance, 8/13/14]
? CFPB: 20 percent of new payday loans cost the borrowers more than the amount borrowed. [Yahoo Finance, 8/13/14]
? An average payday loan claims a third of a borrower’s next paycheck. [Cleveland Plain Dealer, 6/13/14]
? CFPB: half of all borrowers took out at least 10 sequential loans. [Cleveland Plain Dealer, 6/13/14]
? CFPB: 60 percent of payday loans are renewed seven or more times in a row, typically adding a 15 percent fee for every renewal. [Times Picayune, 5/8/14]
? CRL: the average payday loan customer spends two-thirds of the year in hock to the payday lender. [St. Louis Post Dispatch, 6/18/14]
? 22 percent of monthly borrowers, “largely people whose income is from social security”, remained in debt for an entire year. [Cleveland Plain Dealer, 3/26/14]
? Only 15 percent of borrowers were able to repay their initial loans without borrowing again within two weeks. [Cleveland Plain Dealer, 3/26/14]
? CFPB: Three quarters of loan fees came from borrowers who had more than 10 payday loans in a 12-month period. [Cincinnati Enquirer, 8/11/13]
Payday lending is a huge problem. A huge industry has grown with a business model of trapping low-wage people in a debt trap and draining everything they can from them. Yes, low-income workers need some place to turn in a financial crisis. But setting financial predators loose on them is not the way.
Doing Something About It
In various parts of the country, activists are taking the fight directly to the payday lenders, as shown in this video:
On August 1, one-hundred activists from twenty-five states took action on Speedy Loan, a payday lender in Milwaukee, to call on Speedy Loan Corp. owner and president Kevin Dabney to stop trapping families in 500 percent interest debt-trap loans. Monday’s action came midway through the 90-day public comment period on a proposal to issue the first-ever national rules by the Consumer Financial Protection Bureau (CFPB) to regulate the payday and car title lending industry.
Join the fight! Go to StopPaydayPredators.org and make a comment to the CFPB.
The CFPB is proposing new rules to crack down and protect Americans from these scammers. The bureau has opened up a public comment period.
To dismantle the debt trap, payday lenders should only loan to borrowers who can afford to repay their debt.
You can make a comment to the CFPB in support of a strong rule. From the website:
We can rein in the worst payday lending abuses with a proposed rule from the Consumer Financial Protection Bureau. Payday lenders are fighting to keep their unfair and abusive practices going. It’s up to us to make sure the CFPB hears loud and clear that we need to stop the debt trap once and for all.
A single unaffordable payday loan is one loan too many. The proposed rule gives a “free pass” to payday lenders to make six bad loans, allowing lenders to sink people into a dangerous debt trap before the rule kicks in. The CFPB was right to base their proposal on the standard that borrowers should be able to repay their loan, but that standard must be on every loan, from the first loan. The CFPB should also enact protections to prevent lenders from stringing people along by ensuring a 60 day break between loans and limiting ‘short term’ loans to 90 total days of indebtedness per year.
The payday lending industry is spending millions on a disinformation campaign that includes flooding the CFPB with comments from customers coached to write industry-friendly statements. We need to push back against the industry. Please leave a comment now for the CFPB in support of a strong rule.
This post originally appeared at Campaign for Americas Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progressive Breakfast.
First envisioned more than a decade ago, a Sonora-area radio station with a focus on local arts and culture is set to begin broadcasting before year’s end.
After an intricate dance with the Federal Communications Division, the Tuolumne County Arts Alliance and a handful of local citizens have acquired a call sign for the station, KAAD-LP, and will broadcast out of a basement transmission studio in the Sonora Dome on FM 103.5.
With an official unveiling and fundraiser scheduled for the evening of Sept. 24 in downtown’s Coffill Park, and the launch on Thursday morning of an official website – KAAD-LP.org – the visionaries behind the project are celebrating the station as a triumph of community spirit that fills a vital need for a sharper regional and local identity.
“A pretty good block of the Mother Lode has never really identified itself,” said David Purdy, a former instructor of theater at Columbia College and a driving force behind the new station. “We hope that out of this place, out of the ashes, will come something that my kids and grandkids and great grandkids can stay for and be part of, that it doesn’t just become a series of golf courses, but that there remains that historic flavor.”
Constance O’Connor, executive director of the Arts Alliance, said she believed that Radio KAAD would provide “another voice for our community,” one that underscored diversity and captured the mission statement of the Arts Alliance: “To promote the arts and arts education in Tuolumne County, thereby enriching the lives of its residents and visitors.”
Once up and running, Radio KAAD will feature a mixture of original and syndicated content every day of the week from 6 am until 11 or 12 pm
In a broadcast studio inside a nearby Cassina High School classroom, a color-coded programming schedule displays dozens of shows with wide-ranging themes: a daily local news program; veterans’ programs; a show on local Latino culture called “Corridos”; a half-hour financial advising program hosted by Bob Vance of Vance Capital; a rock climbing show with appearances by local expert climbers; and dozens of music programs with original and, in some cases, live recordings.
Purdy said he and his wife, Ellen Stewart, also for many years an instructor of theater, had drawn on their deep relationships with the Mother Lode region to pick or create the programming.
Both have lived here for 50 years, he said, adding that Stewart is a fourth generation local: her great-grandfather once worked on and operated a section Sonora Pass near the Kennedy Meadows entrance.
“Somehow we wanted to reflect in the considerable variety of the programming both the physical characteristics and the nuances of the physical environment,” he said. “But more importantly, the people that we have had the privilege of knowing and teaching and directing and working with.”
Because KAAD-LP 103.5 is “low power,” users will be able to pick up a clear signal only while inside a roughly a 35 square mile area stretching from Columbia in the north to Chinese Camp in the south, and from the western shores of New Melones Lake in the west to Standard and Phoenix Lake in the east.
Hills and mountains obstruct and weaken the signal, which comes from an antenna attached to the top of the Sonora Dome.
But those with internet will be able to tune in from around the world.
“It’s local, but the great thing is that anyone with a connection to the internet can pick it up anywhere — even in Lithuania,” said Ellen Stewart, a theater producer and director.
It was Stewart who chiefly designed the website, where users will be able to stream the station online. She said it had been months in the making, but reflected years of planning.
“We’ve been staggering of and on this website … since April,” she said. “We haven’t worked on everything everyday, but it’s been in our lives for years now.”
Even without the aid of the Internet, ambitions for KAAD do not cease with the Dome. With luck, the broadcast could one day be bounced through repeaters in town centers throughout the region, potentially reaching a far wider audience, according to Purdy.
A project long in the making
In 1999, O’Connor described her vision for the Sonora Dome.
The stately white building that looms over downtown Sonora has been largely vacant since the 1970s, when state regulations forced Sonora’s grammar school to relocate to a new campus on Greenley Road.
For a span of years it housed the Tuolumne County Superintendent of Schools staff, but since 2011 or 2012 it has been used primarily to store school records.
Classrooms that once housed elementary school kids and later county staff are now piled high with knick knacks and antique furniture: dusty paintings, garden implements, even a couple old wooden derby racers.
One floor above, an auditorium that resembles a ballroom is eerily still, dust and plaster sprinkling the floor.
Lamenting the decline of the handsome building, O’Connor pushed for an influx of resources to the Dome, suggesting that it could serve as a hub for a host of arts and community services, from the Tuolumne County Art Museum to the Visitors Bureau to the Chamber of Commerce.
It was a vision that never came to pass. But out of it emerged Radio KAAD.
“That’s kind of how it started,” O’Connor said in an interview Thursday morning. “I had written a paper for my vision for this. And sort of buried in it was the idea that we could have a broadcast station.”
Enter Dave Purdy and Ellen Stewart. Lifelong adherents of the arts, they had long hankered for a radio station of their own, but strict stipulations from the Federal Communications Commission had barred them from applying.
Typically the Commission only allows non-commercial radio station applicants to apply once every 10 years or so, and to do it then during a mere two- or three-week window.
That window opened up in late 2013, and Stewart and Purdy seized it. Through a partnership with O’Connor and the Tuolumne County Arts Alliance, which has lent the radio station its crucial nonprofit status, they speedily filed an application for a license to the FCC.
In February of the following year, they heard back: the license was all theirs.
Since then, the Arts Alliance, Stewart and Purdy have teamed up with the Sonora Union High School District to rent space at the base of the Sonora Dome to use as a transmission studio, and have used crucial grant money from the Sonora Area Foundation to purchase radio equipment. They have also rented a small classroom on the campus of Cassina High School, and have plans to convert it into a broadcast studio complete with a green room and recording equipment.
Although the station intends to remain all-volunteer, funding could pose dilemmas for long-term sustainability. Plans for the moment call for the generation of revenue through sponsorships from local businesses and organizations, local fundraisers, and membership drives.
Still, daily on-air programming calls for a lot of maintenance, Stewart said.
For now the top priority remains making it to the debut broadcast. Stewart and Purdy have set a tentative date of Nov. 1, but there is much work to be done first, including retrofitting the broadcast studio at the leased Cassina High School space and recruiting programmers and other technicians.
“Now we are just now at the place where we are opening this up to programmers,” said Stewart, who plans to do on-air dramatic readings of writings by local authors, among other programs. Purdy, too, plans to be on the air.
While current programming plans are extensive, they could be just the beginning.
O’Connor said that Radio KAAD would be a perfect conduit for Poetry Out Loud competitors, or local high schoolers who compete annually in poetry reading competitions.
And while Radio KAAD for the moment has not been able to work out an arrangement with Sonora High School on a proposed media and journalism course, O’Connor is hopeful that, too, is in the cards.
“It’s exciting,” said O’Connor. “It really truly feels like the sky is the limit.”
DALLAS, TX – 8/17/2016 (PRESS RELEASE JET) — Economics has often been called the dismal science for successfully predicting eleven of the last four recessions. Its true that much of what you find on the internet tends toward extremes. Either things are going to be great forever, or there is no hope anywhere in the world.
Aiming to buck this trend, Stewart Fields, a Dallas-based financial advisor, has started a new website: stewnomics.com. I took a look around the web and saw a whole lot of hype and a whole lot of emotional reaction, said Fields. I want to let people know theres still a rational middle ground in the world of economics and news.
Fields comes to economics and finance by way of an interest in psychology. He uses the latest in forecasting and analytic tools, but also brings to bear the study of human decision-making. All of these skills are on display on the website, which offers cultural commentary and reactions to financial events from Fields unique perspective.
The website is a natural outgrowth of Fields work as a financial analyst. Since he spends most of his time thinking about and planning for changes in markets, writing about them is a way to get those ideas on paper. It started as a hobby, honestly. Id show these little snippets around and people would say lsquo;That looks great. You should start a blog. I started tinkering with WordPress, and, before I knew it, I had a website up!
The site updates between 3 and 4 times a week, depending on how fast the news cycle goes. I dont want to end up saying nothing just because I felt pressure to say something, so updates come when news happens, Fields said. So far, the efforts paid off. Every post is a surprisingly in-depth look at some contemporary news item, delivered in 500 words or less. If brevity is the soul of wit, stewnomics.com is the wittiest site on the internet.
When hes not laying complex economic trends down in comprehensible language, Fields maintains an active financial advising service. If youre interested in reading more, check out stewnomics.com.
Full News Story: http://pressreleasejet.com/news/new-economic-website-breaks-the-mold-by-offering-sensible-moderate-advice.html
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Company Name: stewnomics.com
Contact Person: Stewart Fields
Country: United States