Showing posts with label predatory lending. Show all posts
Showing posts with label predatory lending. Show all posts

Kudos to Richard Eckstrom!

As the first CPA elected State Treasurer and then Comptroller, Richard Eckstrom brings something that is hard to find in state government - actual financial and accounting knowledge. It's no small surprise to see him put such knowledge to use as a fiscal watchdog over state government.

Last weekend, on his blogsite, Watchdog for the Taxpayers, he went beyond the usual political chatter to talk about a more fundamental problem in today's society: the inability of many people to really understand personal financial issues.

Because of “Tax Day,” April is a month when many people take stock of their finances. Unfortunately, it is also a grim reminder for many citizens that their personal finances are in trouble. Our personal habits for saving, borrowing and spending not only have a big impact on the well-being of our families, they affect the health of our state and national economies, and even our national security. With this in mind, many community leaders are increasingly involved in efforts to ensure that America’s students have the sound financial literacy skills they will need to be successful in life.

Sadly, America’s lack of personal financial literacy has helped to create some very serious problems in our nation, from massive borrowing and personal debt, the sub-prime mortgage crisis with resulting home foreclosures, trade deficits, our national debt, the large number of people who file for bankruptcy, and high taxes to finance the “safety net” provided for those in economic trouble.

As part of my work as my company's corporate communication officer, the biggest issue that we discuss in our publications that is not related to work is personal finance - budgeting, taxes, avoiding predatory lenders, etc. It's a real problem that will require a lot of education to overcome.

Kudos to Comptroller Eckstrom for highlighting this issue. As is often the case, we in the Blogland couldn't agree with him more.

Rock Hill to tackle payday lending

With the legislature having gone home without dealing with the issue of predatory lending - today's equivalent of video poker - the city of Rock Hill has decided to take aim at these businesses through zoning:

Leaders in Rock Hill have decided to make it tougher for new payday lenders to open after the number of businesses in the city offering the short-term high-interest loans tripled in six years.

The City Council passed zoning laws on the businesses Monday night, banning new payday lenders from opening within 300 feet of neighborhoods, churches and schools and within 1,000 feet of existing lenders.

The rules also won't allow lenders to open in stand-alone buildings, requiring them to be in shopping centers or supermarkets of at least 30,000 square feet.

Six years ago Rock Hill had less than a dozen payday lenders. Now the city has 38, officials said.

The boom happened after North Carolina, just 10 miles to the north on Interstate 77, banned payday lenders. Georgia also has banned the businesses.

- Greenville News (6/26/2007)

... to which Jamie Fulmer, the local predatory lending PR hack complained "If you take away our product, all you've done is take away one of the tools that folks have to choose from when they find themselves in need of money".

Really, Jamie? Do you really think that people come to you because they have any other "tools" to use to make ends meet?

In any event, it will be interesting to see where this effort ends up. We certainly hope that this helps reduce their appeal in York County.

Opening fire on predatory lenders?

It sounds like Michael Bolton over at The State is pissed over the Legislature's failure to rein in predatory lending during the recently-adjourned 2007 session of the General Assembly.

On the 6th, he blasted the industry for its ability to wield legislative influence to bottle up efforts to rein them in:

Payday lenders have shown their true color — money green — and they’ll do anything to keep their gravy train riding roughshod over our state.

Shamefully, this isn’t just the fault of payday lenders. Lawmakers sanctioned this predatory business and have the authority to rein it in, but have decided they won’t. Legislators such as Sens. Jim Ritchie and Jake Knotts helped ensure nothing meaningful got done this year

The next day, he took aim the partnership with numerous banks have with predatory lenders, by fronting them large amounts of cash for their operations:

Considering the fees they charge, the least banks could do is help their customers who are being taken advantage of by payday lenders. One of the few requirements for getting one of the short-term loans is that you have a checking account.

Despite the fact that they put their own customers at risk, banks have no problem extending multi-million-dollar credit lines to large lenders, particularly the few that are publicly traded.

Backing from major banks and investment firms such as Morgan Stanley has helped payday lenders pull off a major coup: They have been able to take a faulty business model that depends on people’s inability to repay their debts and convince Wall Street investors to buy into it.

Shame on the General Assembly for not standing up to an industry that has become as widespread and predatory upon our state's working poor as the video poker industry had become in the 1990s. Once more, we become the best, last resort for an industry which has been run out of other states. When will we do better?

Look for more discussion about this subject in the near future.

Last week of the General Assembly

Last week of session in the General Assembly, and three days to go to settle a whole raft of issues stuck between the House and Senate, including the state budget, tax cuts, SCDOT, and workers' compensation reform.

Behind those major issues, as always, are lots of other bills and issues that probably have a lot less of a chance to see progress, including:
  • Predatory Lending (H 3294, Rep. Clemmons)
  • "Grandfather" zoning requirements to keep developers from annexing into cities to get out of county zoning requirements (H 3642, Rep. Herbkersman)
  • Protecting child visitation for non-custodial parents called up for military service (S 0808, Sen. Hawkins)
  • Requiring all Highway Patrol cars to carry breathalyzer test devices (H 3634, Rep. Gullick)
  • Prohibit state agencies from hiring lobbyists (H 3360, Rep. Merrill)
Lots of bills, such little time. What to pass, what to shelve ... ?

So, what are your thoughts about what was done good, done bad, or not done at all by the General Assembly this year.

Time to rein in payday loans

Monday’s Post and Courier carries an editorial calling for the state to crack down on predatory lenders, to which I couldn’t agree more.

Predatory lending rides on state laws which allow virtually unlimited finance charges upon short-term loans without collateral. They offer a variety of services to get their money, including:

  • Pawn shops
  • Check advance/ “Pay Day” loans
  • Title loans
  • “Rapid” tax refund services
With tax filing time approaching, the tax refund anticipation loans will be flying, charging people exorbitant rates of interest to receive loans which are presented as “rapid refunds”. In reality, they would receive in a week or two if they filed it electronically.

Predatory lending practices upon employees in the construction industry are no small deal. The money lost to payday loans, where finance charges can match, and even exceed, the amount borrowed, has a real impact upon the standard of living of employees. Some of those suffering the worst seek raises to offset their borrowing costs, or seek new jobs which pay more money, but are beyond their abilities, and they soon find themselves unemployed.

While some of the information is probably a bit over the top, such as Julian Bond’s claim that payday loans drag middle class people into poverty, the proliferation of predatory lending practices are of real concern. Many states have worked to rein in this practice. The Department of Defense is pushing for action to protect military families. South Carolina should not miss this call to action.