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Robert L. Johnson Urges Job Creation and Better Lending Practices for Minorities
June 11th, 2011
The RLJ Companies seeks to target undiscovered or underserved markets
Addressing the Congressional Black Associates, Robert L. Johnson, founder and chairman of The RLJ Companies, called for a national dialogue from members of Congress to address the need for better and improved financial services options for low-to-moderate income Americans who rely heavily on payday lenders for financial transactions. Johnson also called for a new commitment to providing opportunities for minority employees and minority businesses through OppsPlace.com, the preeminent website for corporations looking to attract minority job seekers and minority businesses using the accessibility of the Internet.
Payday lending is never the best option
Johnson said, “We all know that payday lending is never the best option but often it is the quickest and most accessible type of loan option available for individuals in need of financial assistance and on a short notice. Such loans often include fees and interest rates that rival credit cards and are never the best choice for long-term financial needs. It is for these reasons that I urge Congress to increase the national focus on payday lending and predatory lending practices that impact low-to-moderate income families, particularly African Americans.”
60 million American adults are “underbanked”
Johnson cited the recent study by the FDIC, saying that nearly 60 million American adults are “underbanked,” meaning they do not have a bank account or use alternative financial services. Over half of African American households are underbanked and African Americans are six times less likely than white Americans to have a bank account. Millions of working Americans rely on payday loans to cover unexpected bills, make repairs to their cars, or to pay for urgent medical expenses.
The financial system
“Our financial system has not worked for an entire class of hard working Americans and recent regulatory changes may make financial institutions even more reluctant to serve this growing population. Individuals with low-to-moderate income, who live from paycheck-to-paycheck, have lost access to financial products that help them establish or re-establish themselves financially and I am looking to address alternatives to payday lending as we know it today.”
Huge obstacles
In addition to the challenges within the financial services system, minority Americans also face obstacles when trying to identify employment opportunities and become business vendors and suppliers in corporate America. In response, Johnson in collaboration with Virginia-based firm, Symplicity, has created OppsPlace.com.
Solving social problems
“I am personally committed to finding business solutions to solve social problems such as the high rate of minority unemployment and limited minority business opportunities. OppsPlace.com will help address this problem and will help corporations fulfill their diversity objectives, while meeting the workforce needs and supplier participation goals of their business,” he says. “Having grown up in a working class household I understand this problem, this is an issue I am passionate about. All Americans deserve access to financial services that work for them, not against them, as well as have the right to compete for jobs in our country. I have made these issues a priority,” he concluded.
Hakeem Jeffries Signs
June 7th, 2011
On two bills clearing way for ‘Payday’ Loans
In a surprising move, Hakeem Jeffries, Prospect Heights Democrat, agrees to support legislation that would condone what city consumer advocates call “predatory” lending practices.
Hakeem Jeffries
Jeffries is the Assemblyman in New York’s 57th Assembly District. Before being elected in 2006, he was an active participant in community affairs within this Assembly District and had made two previous attempts at winning the district.
The Payday Loan
The “payday” loan could be on its way to check-cashing businesses across Brooklyn, if a cross-section of state elected officials, including Jeffries, has its way. Two identical bills introduced in the state Senate and Assembly earlier this year seek to lift the existing 25 percent interest cap on loans issued by financial institutions across the state. According to city consumer advocates, the legislation would clear the way for payday loans carrying interest as high as 400 percent at cash-checking outlets that cater to low-income residents throughout the borough.
Desperate consumers
Jonathan Mintz, commissioner of the city Department of Consumer Affairs said, “The last thing desperate consumers need is high interest predatory loans from check cashers.” Mintz said he understood the need for loans was great in low-income neighborhoods historically underserved by the banking and credit union industries. However, he stressed that the practice of payday lending, in which workers request an advance on their next paycheck at typically high levels of interest, was not the way to go.
Access to short term loans
“Working class people need access to credit and short term loans,” said Jennifer Sinton, deputy director of South Brooklyn Legal Service’s foreclosure prevention project. “The thing is … there are programs by credit unions that do involve responsible lending. Some of the same communities who were worst affected by the foreclosure crisis are now the target of the payday loans,” she said. According to Mintz, despite looming budget cuts on a wide-range of city services, Mayor Michael Bloomberg remains committed to putting more resources into the city’s Financial Empowerment Centers that provide counseling and assistance to residents struggling to stay ahead of their bills.
The bill
Sponsored by Bronx Democratic Assemblyman Carl Heastie, the bill is currently under consideration by the chamber’s Committee on Banks. Mintz said he planned to lobby against the bill on behalf of the city in a visit to the State Capitol on Monday.
A veteran of the fallout left behind by the subprime mortgage crisis, Sinton said she saw parallels between the predatory lending practices prevalent during the housing boom and the payday loan industry.
Some Wisconsin Republicans Favor Payday Lenders Despite Their Bad Reputation
May 28th, 2011
Once again Wisconsinites may be able to secure loans using auto titles
This is according to a proposal in the state Legislature which is designed to roll back restrictions on payday lenders. Repealing the law that was passed last year is a bad idea for two reasons. The first is that it exposes those already in dire economic situations to lenders that charge shockingly high annual interest rates of up to 500 percent or more. The second is that lawmakers want to insert the change in the state budget, and it doesn’t belong there.
The proposal is added
The Joint Finance Committee voted 11-5 this month to add the proposal to the budget. The legislature has long advocated keeping policy issues out of the budget, which should only be about spending. Both parties have been guilty of this, but that doesn’t make it right. If lawmakers are going to slip provisions into the budget, these are terrible ones to choose.
Payday loans and auto title loans
These can exacerbate the debt spiral. If people are short on cash, they can get a short-term loan from a lender by paying a fee and writing a post-dated check. The problem comes when the cash is used, and there aren’t enough funds to cover the loan when it comes due.
Interest rates
The interest rates that auto title loan lenders charge would make credit card companies blush. They put people in jeopardy of losing their means of transportation if they can’t pay their debt.
Predatory lending practices
Last year, Wisconsin decided it had had enough with predatory lending practices. Sen. Mike Ellis of Neenah called short-term lenders “legal thieves”. This year, lawmakers are deciding to let them creep back into the market. It’s just setting the poor up for further misery.
Limited Payday-Lending Regulation Bills Passed By Senate
May 24th, 2011
On Monday the Texas Senate approved two measures designed to regulate the state’s payday lending industry for the first time, without ending the industry’s controversial lending practices.
A modest step
Sen. John Carona, R-Dallas, said his legislation is a modest step but it will still require more than 3,500 storefront payday offices to obtain a state license and to disclose full information about their fees to customers.
The ‘cycle of debt’
The legislation does not address the so-called ‘cycle of debt’, the period when consumers extend their short-term loans, on average a dozen times, racking up heavier fees. Instead, the measures leave the industry’s fees unregulated. “What we present to you today is the limit of what we could do,” Carona said. “I leave this session disappointed that we’re not able to do more.” There was little real debate in a chamber that was half-empty at times, and Carona urged senators not to offer any amendments.
The Senate approved
The Senate overwhelmingly approved House Bills 2592 and 2594. The votes were 27-3 and 28-2, respectively. The House must approve Senate changes before the measures can go to the governor for ratification. “Amending these delicate bills in any fashion would probably cause it not to pass the House,” Carona warned. Both bills were the result of negotiations between the industry and consumer groups.
Another bill
Sens. Wendy Davis, D-Fort Worth, and Royce West, D-Dallas, had written a bill with tougher regulations, including a cap on fees, but they couldn’t get their colleagues to agree to bring it up for debate. Davis blamed the power of the industry’s lobby for watering down the legislation. She said, “It’s very disappointing. “It makes you lose your faith in democracy.”
Military families
Federal law caps fees to military families at 36 percent a year, but that limit has not been enforced in Texas. Carona’s legislation is supposed to change that, but Davis said the inclusion of installment loans in the new legislation would allow the industry to circumvent that fee cap.
Summarizing
Wendy Davis said, “We’ve actually taken some steps backwards.”
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