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"NO WONDER BANKS & CREDIT UNIONS HATE PAYDAY LOANS"I was at a dance party in Newport Beach, California the other night (Yes, my girlfriend is a dance teacher so there I was) and the subject of what I do for a living came up. Now, when I'm in the haughty suburbs of Newport Beach my typical response to the question of what I do for a living is usually, "I'm in the sub-prime financial services industry." Probably just like you, I'm not in the mood to defend myself for making money with payday loans. And I know after working on the "front lines" or the "counter" as we say, that we really do help a lot of people. However, I still cringe a bit when this subject comes up. Not as much as I used to but I still get the shivers. So of course, being in Newport Beach on the "left-coast", there had to be some kind of consumer protectionist with a desire to attack me. (Actually, I really think he was simply jealous because I'm a better dancer than he. I swear he was watching me out of the corner of his eye as I did the West Coast Swing.) Now this guy was not your typical Center for Responsible Lending (CRL) sympathizer! He knew enough of the "facts" to try to give me a hard time. But, luckily for me, and the rest of us in the payday loan industry, I had the benefit of very recently reading: "Predatory Reporting" on Payday Lending? Now this IS ONE REALLY WELL WRITTEN and, more importantly, WELL RESEARCHED article on the REAL FACTORS affecting the attackers of our industry. It's a bit lengthy but you really should check it out in it's entirety: A few highlights... ********************************************************************Newsletter continued below ****************************************************************Read a few of our previous Newsletters here if you missed them. The focus of our last few Newsletters
was : Subscribe at no cost to you for our Payday Loan Newsletter. The frequency is typically once each month. If
you have an interest in the payday loan industry, YOU NEED OUR Payday Loan NEWSLETTER! Payday Loan Newsletter Continued... A few highlights... A Factiva search of newspapers across the country shows that there were over five thousand negative payday loan stories in 2007 alone. NO SURPRISE HERE! A 2007 study by Veritec Veritec (a government contractor that provides program management to state agencies which regulate the payday loan industry) concludes that the Center for Responsible Lending (CRL) attacks on our industry are totally erroneous. After examining payday loan usage in Florida and Oklahoma, Veritec concluded that the data "simply does not support the CRL conclusion about fees paid" and the need to outlaw payday loans. A consumer using the option of skipping a credit card payment, rather than using a payday loan, triggers an average late payment fee of $35, according to Index Credit Cards. "Over-the-limit" fees for credit cards average $36 and the consumer's credit rating is damaged typically causing the credit card company to increase the APR on future uses of the card. Another method is check kiting Check Kiting . But NSF fees average $28.23, according to bankrate.com. Moebs Services, an economic research firm, estimates that NSF fees account for 18% OF THE NET OPERATING INCOME OF BANKS AND 60% OF CREDIT UNIONS OPERATING INCOME! That's unreal!!NO WONDER BANKS & CREDIT UNIONS HATE PAYDAY LOANS! So, when consumers use payday loans to avoid these bank and credit union fees they cremate the net income of banks and credit unions! Another option to payday loans is for the consumer to purchase "overdraft protection." However, The Woodstock Institute, a nonprofit group that promotes economic development in lower-income and minority communities, estimated that the APR for bounced check "protection" averages 2400 %!! Sheila Bair, the current chairman of the board of directors of the Federal Deposit Insurance Corporation (FDIC), during a 2005 speech, stated "the 'enormous' fees earned on these programs discourage credit unions and banks from offering payday loans. Since they reap such enormous revenue from overdraft protection and bounced check fees, credit unions and banks have a vested financial interest in limiting consumer options and having payday loans removed from the marketplace." She warned that customers were "catching on" and turning to payday loans for their "cheaper product." Even more astounding, the Center for Responsible Lending (CRL), which has focused their tremendous resources against the
payday loan industry, is headed by CRL founder and Self-Help Credit Union CEO Martin Eakes! On March 18, 2008, Forbes.com
published an article titled "Subprime's Mr. Clean: Martin Eakes' Campaign to Straighten Out Subprime Lending Has
Some Wrinkles." The article makes the point that Eakes's leadership of a credit union creates a conflict of interest
with regard to CRL's activities. The article quotes noted economist Donald Morgan: "Who then benefits from payday loan bans? Credit unions, for one", notes Morgan. He says interest rates on overdrafts charged by credit unions and banks can exceed 2,000 percent, dwarfing the high interest rates on payday loans. Credit unions, he adds, have been especially hurt by payday lenders cutting into their overdraft fees. Forbes.com notes that in North Carolina where payday loans are outlawed, CRL and Eakes were "instrumental in outlawing payday loans." Forbes.com also notes that Self-Help assets have jumped from $114 million in 2003 to $292 million in September 2007! CONFLICT OF INTEREST? HELL YES!!!! Additionally, a study by Morgan and Strain's evaluated how households fared in Georgia and North Carolina after payday
loans were prohibited: Easing restrictions on payday loan limits actually seem to IMPROVE consumer financial difficulties. Witness Hawaii, where payday loan limits were increased from $300 to $600. Borrowers problems with debt and the Hawaiian rate of bankruptcy fillings actually DECLINED! And regarding the effect of banning payday loans on the incidences of bounced checks, Morgan and Strain note: So, it shouldn't require Sherlock Holmes to figure out just who really hates payday loans and why they fight us so hard in the name of protecting the consumer! It's never been about the consumer. It's about the MONEY! You know the old saying, "Follow the Money." Do you think that banks and credit unions may even be funding organizations like CRL? HELL YES!!!! Do you think the media and the journalists will figure all this out? Hell No!!! Oh and do you think I was able to DESTROY that consumer protectionist guy at the dance? HELL YES!!! Please read the full article at: Payday Loan Study And please forward our Newsletter to journalists, regulators, legislators and anyone else interested in helping consumers to maintain choice in the financial products they have access to! The Payday Loan Guys, ********************************************************************Our new Payday Loan Industry Blog: OK, time to go.......... See you all next month. And remember, "Make Money Payday Loan Fans". If you thirst for more payday loan knowledge, go here: This information is discussed further in depth in our Payday Loan Startup & Training Manual. You may ORDER it NOW. Next Month a new topic and coverage of more states. From: Trihouse Enterprises, Inc. If you have comments, questions, topics you would like covered...PLEASE contact: |
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