Payday Lending is All About the Pyramiding the Loan, not the Payday

Little Rock   With the admissions that the bigger-than-God-and-government banks are skimming gazillions in profits from predatory payday loans, some welcome sunlight is shining on the dark caves of financial services for workers trying to stretch the money to make the month or deal with emergencies.  The Pew Research Center released a report on some of the experiences of payday lending consumers that seems to match a similar study from ACORN Canada of practices there more than 5 years ago.

Pew’s summary of their findings is straightforward:

“Pew’s survey results reveal that people choose these loans to avoid outcomes like long-term debt, borrowing from family or friends, overdraft fees, and cutting back further on expenses. But the average loan requires a repayment of more than $400 in two weeks, the typical duration, when the average borrower can only afford $50. When borrowers have trouble paying off the loan, they return to the very same choices they initially tried to avoid.”

Additionally, Pew said that, “the average payday loan is $375. Americans spend $7.4 billion per year on the loans, including an average of $520 in interest per borrower who ends up indebted for five months of the year.”  As terrible as that sounds, the ACORN Canada study found far worse, even though the general legal climate for payday lenders, which we campaigned on aggressively and with significant success in several provinces, is better in Canada.  We found in a more extensive survey that on average it took 14 months for payday borrowers to escape the payday lenders.  The first loan generally initiated a cycle of something akin to borrower “recidivism” that put the loan victim on a yo-yo back and forth with new and adjusted loans before they were bounced out or escaped with loans outside the system.

The Pew figures are bad enough when the reality emerges that interest overwhelms the initial loans.  Reading the study, it would also seem that the Pew figure does not include the additional bank charges and fees triggered through the collection process through automatic bank drafts, NSFs, and surcharges.   At the same time Pew finds that “while payday loans are often presented as an alternative to overdrafting on a checking account, a majority of borrowers end up paying fees for both.”

The industry association claims to the New York Times that the “typical fee” is $10 to $15 on $100 borrowed, which is obviously complete balderdash.

This study, our study, and a million others cannot alter the fact that these loans are predatory, essentially because they can be.  Families desperate for money to bridge gaps and emergencies see no choices and therefore with eyes wide open march to the slaughter of these outfits, until drowning or pulled ashore when forced to confront their own embarrassment.  Nonetheless the industry can lie brazenly, since they and their bankers know no shame.  Predation is the business model.


Welcome to My World on Thanksgiving!

photo from ACORN in Buenos Aires

New Orleans   On the eve of the USA Thanksgiving there is a long list of chores and cleanups, some long postponed, that have to be sorted out as family and friends assemble.  Normally, these times signals a momentary lull, a chance for a breath, but believe it, working in the world is not like that at all, and the pace quickens.   While so many are getting ready to put their feet up and feedbag on, I thought I would share:

  • Canada has Thanksgiving, but almost a month ago, so it’s just another workday and the emails keep rolling, especially on their release of a new remittance report.
  • Pictures in this morning finally from Buenos Aires on a recent human rights workshop in La Matanza, which the organizer had time to send since a general strike yesterday shutdown the city and most of the transportation.
  • Skype conference call today to prepare for our setting up the field program next week in Ecuador for the national elections in five provinces.
  • The election may be over in the USA, but ACORN International members are examining slates, programs, and plans for elections this coming year not only in Ecuador, but also in Honduras, Kenya, and Indonesia.
  • Work slowed in Mumbai as our operations in Dharavi with many Muslim members battened down the hatches as the shock troops of the right parties hit the streets to mourn the death of communalist instigator Bal Thackery.  Newspaper reports indicate that police have picked up two young women who questioned the respect being given this man on Facebook.
  • Social Policy went to printer yesterday for the fall issue, so proofs have to be checked out today, so issue hits mails internationally and domestically next week.
  • Interesting hour long conversation yesterday with David Moberg, labor reporter at In These Times, about organizing strategy and the work being done by UFCW at Walmart these days in USA.
  • Interesting reports from ACORN Italy on new legal services support being rolled out for our members there with more details to follow.
  • Early morning email from Belgrade where a former ACORN organizer in Ottawa is starting the process of seeing if an ACORN Serbia can be built there in coming months.
  • As I write this, I’m bouncing back and forth on Skype notes, about how to integrate community organizing into an on-line medical training course being offered globally and recently accepted as a pilot for 500 med students in Sudan.  They asked that I block dates in November 2013 to speak with them at their conference in Thailand potentially.
  • Double checking the schedule at Fair Grinds Coffeehouse so we can fit in the meeting after the holiday on how well we are doing on our environmental footprint and sustainability measure, making sure we are staffed fully on Thanksgiving because our community needs us, approving another group to play soon and another yoga and dance time slot, and getting ready to host the Tides Foundation JBL Awards presentation next week.

There’s always a lot to be thankful for on Thanksgiving and this small sample reminds me how lucky I am many decades ago to have found work that teaches me daily and resists boredom no matter the tedium of tasks, and where so many of us have developed small skills that can make contributions to the work being done every day around the world to bring justice, equity, and security to so many people.

Gone Fishing with Rod, Reel, and Books

Rock Creek   No newspapers, no cell service, no internet, no television, no plumbing, and only power from a car battery and some solar cells we brought along:  sweet!  Almost two days of chores, which we actually enjoyed, before we could wet a line.  Third cast, I caught a beautiful, good size brown trout.  Lucky days! Life is good!  Am I on vacation or what?

Reading has been interesting and besides catching up on sleep, boy we needed it, that’s what we’re doing.

Little Bets:  How Breakthrough Ideas Emerge from Small Discoveries by Peter Sims was loaned to me on the West Coast recently by a friend.  It’s one of those kind of Malcolm Gladwell books that are so popular these days that draw large conclusions from small evidence.  It wasn’t bad, but it wasn’t all that great either.  In terms of organizing, Sims borrowed a definition from psychologist Karl Weick to define “small wins,” which was interesting:  “…a concrete, complete implemented outcome of moderate importance.”  Another psychologist said these were “landmarks” indicating whether we are on the right direction or not.  Interesting.  Some right on points about the importance of “really listening,” which I wholeheartedly endorse.  A fascinating story about Procter & Gamble’s efforts to expand in lower income communities around the world was fascinating to me.  P&G hires ethnographers to “actually live with representative users” in a program they call “Living it.”  Along with senior managers they “spend time in low-income homes around the world to better understand what matters in their lives, including their desires, aspirations, and needs.”  Scary smart.  None of this was probably worth the $25.00 for the book, and if any of us have to read one more story about how they operate at Steve Jobs Nexus and animation outfit, we’ll all shoot ourselves, but not bad either for plane rides and the like.

One I’m really liking is a book by Keith Heyer Meldahl called, Hard Road West:  History and  Geology along the Gold Rush Trial.  I’m going to leave this one in the Silver Bullet on Rock Creek.  He weaves the rough road for the 49ers and farmers with the geology they are passing.  Having driven most of these trails on earlier trips West, it is riveting, and manages to make geology interesting.  Maybe not John McPhee interesting, but darned good!

The one that is closer to work, but very well written and actually a brilliant history that I’m enjoying is Victory:  The Triumphant Gay Revolution by Linda Hirshman.   Her understanding of social movements and how they develop is spot on, and the history and the players are not as well known to me, so she’s teaching me things that are critical.  Got a ways to go, but I’d recommend this history with four stars!

Plowed into two recent novels yesterday as well to good effect.  One is Richard Ford ‘s new work, Canada.  I like Richard for his work with ACORN in New Orleans after Katrina, and  a book called Canada  has to have value.  Couple that with the setting in Montana, and I was halfway through before I realized.   Finally I started True Believers: A Novel by Kurt Andersen.  The review had caught my eye as a different tale of the 60’s with reference points many of us who remember them would enjoy.  Add some politics to that, and who knows, it might be interesting.  I’m not hating it so far!


Little Hope for New NLRB Rules, SEIU Convention, & Canadian Initiatives

New Orleans  It is time to examine the results of all of the sound and fury of the National Labor Relations Board (NLRB) decisions that conservatives claimed would bring the end of world as they knew it.  The conclusion to date is that there is no change whatsoever!

Step back for a minute and remember that on the eve of Obama’s election many unions thought that changes in federal labor law were imminent.  Some pushed for this to be Job #1 for the new administration.  Obama, Biden, and others had committed to the passage of much needed amendments to the labor law.  Organizing unions like SEIU had task forces, staff assigned, and organizing plans developed.  Top staffers can remember the discussions with the White House chief of staff, Rahm Emmanuel finally signing off on the potential legislation.  Then there was the deluge with the 2010 midterm elections debacle and any remaining hope for legislative relief was long gone.

The strategy morphed into the distant second best of regulatory changes issued by the NLRB on rule making procedures.  The right demonized Craig Becker, a labor leaning board member with ties to SEIU and the AFL-CIO.  Out of these elephantine labors came two major initiatives the NLRB trumpeted.

The first, a much ballyhooed minor posting of workers’ rights that the NLRB had ordered to be posted on the bulletin boards of employers throughout the country has still not occurred and is lost in the courts.  The second, a much diluted but more rapid election schedule which largely benefited the more infrequently organized large bargaining units where hearing and unit appeals can postpone elections for years, is now also held up by court orders questioning the quorum and majority on the NLRB that made the final decisions.  Truthfully, business protests too much.  Neither of these changes were game changers, though they were nice enough and certainly better than nothing by many miles.

It is time for those of us in labor to come to some hard conclusions.  The rules are NOT likely to change.  The game has to change and by that I mean the fundamental labor organizing model, as I’ve argued frequently.

SEIU the premier organizing union of recent decades is now meeting in its quadrennial convention and for the first time in over 30 years they will be “celebrating” a declining membership.  This should never have happened!

Unions in Canada may be acting faster and smarter than their US counterparts and learning some lessons from the US experience that down south we are still trying to deny.  Interestingly in the merger discussions between the Canadian Auto Workers (CAW) and the Communications, Energy, and Paperworkers (CEP) which would create a Canadian super-union,  the key incentive for the merger seems to be a recognition that the organizing model has to change.

Millions of Canadian workers, like part-time workers and contract workers, have no effective possibility of forming a traditional union,” said CAW economist Jim Stanford. “These unorganized workers should not be cannon fodder for unethical employers. We can find other ways for them to use the power of numbers.

They are still a good distance from figuring it out, but at least they are singing the right tune, while I can hear a funeral dirge in the background in union halls throughout America.

SEIU rally in LA

Voter Suppression in Canada

New Orleans  When my friends in Canada compare their politics to the great southland of the United States, I know there’s no compliment coming at the back end of the sentence.  When friends started sending me emails from the great north that said, “robo-calls, voter suppression, sounds like…,” I knew that “USA” filled in that blank.

Sure enough the Conservative Party is being linked to dirty tricks in the last election in which they acquired a majority in Parliament finally.  A call center operation in Edmonton called Racknine (is that a pool hall term for prepping for a game of 9-ball?) that had worked for Prime Minister Stephen Harper in the past has now been linked to fake robo-calls in a number of Ontario cities like Windsor, Guelph, London, and Toronto, as well as Winnipeg and elsewhere.  The calls were to expected Liberal voters and the call would inform such voters that their polling place had been moved to another location and then give them a fake address.  Pretty clear chicanery there!

Voter suppression has become so common now in the United States that it seems there are damned few of us that go berserk at the notion that the state-by-stated forced ID system could push 2 million voters off the rolls here for the elections in November.

In Canada there’s serious discussion about whether or not the penalties are severe enough to deter this kind of behavior in the future.    The current situation in Canada is:

Under the Canada Elections Act, voter suppression – “delaying or obstructing the electoral process” or “the willful endeavour to prevent an elector from voting” – is punishable with up to a $5,000 fine, five years in prison or both.  However, since 1992, no one has been imprisoned for breaking the Canada Elections Act. The largest fine laid under the Act – two fines of $25,000 – was against the Conservative Party for the in-and-out payments.  [This means incurring election expenses over the limits and incorrectly reporting the payments – also something that is commonplace in the USA!]

In the USA we have candidates for office under the Republican standard who are running on a platform of voter suppression.   It would nice to think they were campaigning to knock on a jailhouse door, but that seems not the case here yet.  Go, Canada!

Remittance Disclosures and Western Union Babble Speak

NeDSCN1016w Orleans ACORN International’s global Remittance Justice Campaign (www.remittancejustice.og) continues to confront new, amazing, and mysterious challenges as ACORN Canada pushes forward in Ottawa and British Columbia.

In a meeting won by actions at the ACORN Canada convention six weeks ago with top officials of the Finance Ministry our negotiators efforts to discuss the need for regulation of remittances to prevent predatory pricing and achieve needed equity, transparency, and fundamental fairness was greeted about the same way as if we had started cursing loudly at the front of the church.  We had offended fundamental, conservative Stephen Harper government dogma about so-called “free markets” and laissez faire rapacious capitalism by banks and money transfer organizations, especially if the rip-off occurred with migrant workers and immigrant, “new Canadians” as they are called.

The Finance Ministry turned the conversation to “disclosures” in a patty cake, kiss-your-cousin shot across the ACORN bow.  Disclosures just won’t get it done, but….  There are some critical things that could be achieved by some real disclosures that include:

  • simple language
  • base rate from remitting institution to country for bank customer
  • base rate from remitting institution to country for non-bank customer
  • transparent fees at receiving end if any or a guarantee that there are none.
  • disclosure of exchange rate at time of remittance transfer
  • disclosure of pricing regime compared other electronic transfer procedures to prove this is not discriminatory pricing

We might save billions just by letting that little light shine.IMG_1073-1

On the western side of Canada an action by ACORN British Columbia demanding remittance justice provoked an email response from Englwood, Colorado, a Denver suburb, and headquarters of Western Union.  Spokesman there told the Burnaby News-Leader:

“’Many people worldwide have no access to formal financial services. We invest in rural areas and urban locations alike to offer consumers an option to send and receive remittances and better manage their finances.’  Increased consumer choices for sending money have led to lower costs across the industry, the company said.”

Wow!  Here is what that statement translates to in normal everyday English:

“We enjoy near monopoly advantages in many global markets because there are no other financial service alternatives, so we charge whatever we damned well please to send and receive remittances, because we can.  The only reason we will lower costs is if a competitor crowds into our monopoly market and forces us to have to do so.”

DSCN1019At ACORN I guess Western Union thought it was important to remind us that with no regulations and little competition, rapacious corporate greed can pretty much stand on its hind legs and flip off its customers, their organizations, and entire limp wristed, uncaring governments at their whim and will.  Hello!