Problem:
Unruly Payday Lenders
Payday lenders prey on people in need, exploit lower and middle class America, and drain wealth from our communities.
Here are just a few facts about payday lending in America today:
- Most shops charge you an astounding 400% interest rate for a 30-day loan causing many people get caught up in a cycle of debt.
- There are an estimated 23,600 payday lender outlets in the United States. This is reportedly more than the combined number of McDonald’s and Starbucks nationwide.
- Payday Lenders are 2.4 times more likely to locate in African American and Latino communities, even when other factors like income are considered.
- Major payday lender chains receive their funding from the largest national banks.
- Big banks overall provide over one $1.5 Billion in financing to major payday lenders. Major banks funding payday lending include Wells Fargo (leading payday creditor), Bank of American, US Bank, JP Morgan Bank, and National City (PNC Financial Services Group). All of these banks received TARP taxpayer bailout funds.
- Big banks are now getting in on the act themselves, with banks like Wells Fargo charging their own customers triple digit interest rates for short-term, small dollar loans.
Watch the video of Mitzi Rivers-Singleton of Kansas who ended up paying about $30,000 in fees for a $3,000 loan over a seven year period:
Solution:
Common Sense Payday Lender Regulation
All payday lenders should be required to implement:
All payday lenders should be required to implement:
- A 36% interest rate cap for all payday loans;
- Quality credit to low- and moderate-income communities through community investment agreements that improve access to capital for our communities.
- Get out of the business of funding and providing payday loans;
- Lower interest rates on consumer and small business credit cards and stop charging abusive overdraft fees;
- Provide low-interest small-dollar loan programs.
- Stop incentivizing frontline financial workers to push unneeded and often harmful financial products on consumers;
- Work with us, not against us in Washington by endorsing or dropping their opposition to Obama’s Speculation/Financial Crisis Responsibility Fee and the Consumer Financial Protection Agency (CFPA).
