tagged w/ Payday Loans
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Hey wait a minute this can only mean one thing. That the end of days has arrived? No, that pay day lenders are cutting in on the oligarch’s stash and well what’s a lapdog legislature to do? Stomp their collective feet and pound their fists? Give those usurious lenders a good tongue lashing? Naaahh, just pass another law. So what exactly do these lapdogs want? This is completely uncharacteristic. That means they want something. That’s a promise.Hey wait a minute this can only mean one thing. That the end of days has arrived? No,... more
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U.S. Congress is about to create a new regulatory agency – The Consumer Financial Protection Agency will be launched as part of a large legislative response to the financial turmoil. New regulator will police the financial market on behalf of savers and borrowers.
The consumer protection agency will bring under one roof the oversight of a range of consumer financial products, including mortgage loans, credit cards, payday loans and student loans.
It’s interesting that the CFPA will be a bureau inside the Fed. That is why it’s still not clear how much independence the CPFA will have to regulate payday lending industry. The new agency’s rules can be vetoed by the votes of a council of bank regulators who traditionally have been more concerned about the well-being of banks.
However, if the CPFA gets real regulatory power, nonbank lenders of all varieties will certainly suffer from the new reform. There is a real chance that some of payday lenders will have to close their business. Particularly vulnerable are EZ Corp, Advance America, Dollar Financial, QC Holdings, First Cash Financial Services and Cash America.
Payday lenders say that short-term payday loans online were not a cause of the financial crisis, and as lenders of last resort they claim to provide a critically needed service in an economic downturn. Meanwhile, the industry’s critics say that the payday lending industry buries too many people in debt. Meaningful restrictions and policing of the industry are long overdue, they argue.
The CFPA could end up considering a provision promoted by Illinois Democratic Senator Dick Durbin for capping the maximum annualized interest rate a payday lender could charge at 36%. While a 36% interest rate would seem very high for a traditional mortgage or car loan lasting many years, it’s not enough to support short term payday loans lasting just two weeks.
Payday lenders wouldn’t be able to make loans available to their customers if they offered 36 percent APR. At that APR the total fee charged on a $100, two-week payday loan would be $1.38. At that rate, payday advance lenders could not cover the cost of originating the payday loans. If payday lenders were forced out of business by new regulations, consumers who need payday loans for emergency expenses would have no suitable alternatives.
Payday lending industry employs near 160,000 people, who will lose their jobs in the middle of a terrible recession. Over $3 billion in wages and benefits will disappear. The payday lending industry contributes $10 billion to GDP annually, and generates $3 billion in taxes. Moreover, the most payday lenders are small companies that everyone loves to hurt. It’s clear that the new reform will hurt a lot of people and the U.S. economy.
Anything can happen in politics, so there is no telling how things may change. However, once the CFPA gets up and running, revenues at payday lenders could be cut between 20% and 50%. In a sector that is already saturated and dealing with flat sales, there is a serious question as to whether these regulatory measures would elect to keep their doors open domestically.U.S. Congress is about to create a new regulatory agency – The Consumer... more
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Legislation being introduced Thursday in Congress would try to rein in payday lenders who offer short-term loans that often average to more than 400 percent annual percentage rates and, critics say, trap borrowers in ongoing cycles of debt.
The payday lending industry is worth $40 billion a year. The short-term loans are advertised as quick ways to get cash — usually a few hundred dollars — to tide borrowers over until their next paychecks.
Fees often are in the range of about $50 for a short-term loan of $200-$300.
"Right now payday lenders prey on people needing quick cash," said Sen. Kay Hagan, D-N.C. "They expect immediate repayment, typically within two weeks."
If borrowers are unable to make their payment, lenders offer the opportunity to take out more loans.
According to Hagan, 60 percent of payday lender customers have taken out at least 12 loans in the past year — meaning they likely are borrowing repeatedly.
Hagan, a former banker, will introduce legislation to regulate the industry from Washington.
The bill, called The Payday Lending Limitation Act of 2010, would modify the Truth in Lending Act. Hagan will introduce it as a separate measure Thursday, and again next week as an amendment to the financial regulatory overhaul bill making its way through the Senate.
Right now 16 states and the District of Columbia have passed limits on interest rates for short-term loans. They range from 17 percent to 60 percent.
The states are Arkansas, Arizona, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Vermont and West Virginia. Together, they include about a third of the U.S. population.
Payday lenders say their services extend credit to low-income people who otherwise might not have access to it. Such borrowers often lack bank accounts or consumer credit cards.
Steven Schlein, spokesman for the Consumer Financial Services Association of America, said payday lenders had nothing to do with the financial crisis and shouldn't be part of the congressional overhaul.
"We object to any regulation by the federal government, he said. "We're already regulated by the states."
He said lenders make thin margins now, totaling $6.5 billion in revenue annually through about 110 million loans.
"Any change to our product will eliminate the product, and then where will consumers get $300 loans?" Schlein asked.
Hagan's bill would limit borrowers to six payday loans in a 12-month period. That provision reflects a rule the Federal Deposit Insurance Corp. imposed on banks that allows them to make short-term, high-cost loans, but not for longer than three months at a time.
The bill also would require lenders to offer borrowers extended repayment plans beyond those six loans, at no extra cost to the borrower, and would allow the Federal Reserve to license payday lenders.
"It will protect borrowers by ensuring short-term cash advances actually remain short-term," Hagan said in an interview Wednesday.
A law passed in 2006 effectively prohibited payday lending among active military and their families. The law was pushed by the Defense Department because it saw the debt struggles of its military members as a national security risk.Legislation being introduced Thursday in Congress would try to rein in payday lenders... more
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People Helping People with Payday Plus
The New America Foundation partnered with the city of San Francisco to launch Payday SF, a short term loan which is a alternative to the pricy loans given out by lenders. Valerie Klinker and Vanessa Vega are content producers for YO! Youth Outlook Multimedia.
www.YouthOutlook.org
www.NewAmericaMedia.orgPeople Helping People with Payday Plus
The New America Foundation partnered with... more
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If you are in need of cash to bridge the financial gap between two consecutive paydays then apply payday loans. we can help you tackle with your financial woes with 3 month payday loans, pay day advance, payday loans no faxing and payday loans no debit card.If you are in need of cash to bridge the financial gap between two consecutive paydays... more
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It has been brought to our attention at FraudulentCharges.com that there’s yet another popular scam taking place online. After much research and debate with fellow visitors we would like to offer our opinion and some advice for customers who have been fraudulently charged by MyIdSupport.com and various similar companies via the internet.It has been brought to our attention at FraudulentCharges.com that there’s yet... more
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Recently I have been trying to share stories of how Americans have rung up such an astonishing amount of debt in recent years. For this story, I first staked out a conference on Capitol Hill where online payday lenders and lobbyists honed their arguments to Congress against reform.
I then traveled to a small town near the Virginia-North Carolina border to learn about the experiences of a man who one day googled "bad credit loans" and soon found himself in more trouble than he bargained for.
Check out the video...Recently I have been trying to share stories of how Americans have rung up such an... more
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lagan
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added this
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2 years ago
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I used payday power to get a quick loan. I managed to get my money on the same day i applied.I used payday power to get a quick loan. I managed to get my money on the same day i... more
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MAKE A POD ABOUT IT:
Payday Loans - "I just need enough cash to tide me over until payday."
Please explore these institutions. How they work? Who is using them? What is are issues around these lending operations? What are the alternatives? Perfect opportunity to take your last check from Current (god knows you need the cash), and take us inside this controversial industry.
http://www.nytimes.com/2007/08/28/us/28payday.html?ref=us
MAKE A POD ABOUT IT:
Payday Loans - "I just need enough cash to tide me over... more
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