The Human Face of Payday Lending

montreal-road-in-vanier-which-has-the-highest-pay-day-loan

http://ottawacitizen.com/news/local-news/activists-fight-against-high-concentration-of-payday-loan-outlets-in-vanier

Little Rock    People can read the reports of banks cutting back on small business lending, nod, and say, but, hey, I don’t have a small business. Others can understand that banks make even fewer small personal loans and have surrendered that market to payday lenders and other predatory shysters, and say, hey, it will never happen to me, while ignoring that it is likely neighbors, relatives, and friends walking through the door of these shops that are growing like weeds along the sidewalks of our neighborhoods.

Recently in a story in the Ottawa Citizen, the reporter put a human face on ACORN’s campaign there for tougher regulations, higher licensing fees, and a ban on new stores in close proximity to existing locations.

 

“When chronic illness forced Robbie McCall to quit his job as a heavy equipment operator, he was living comfortably in a three-bedroom home with a finished basement.

His only daughter, now an adult, was attending private school.

McCall, 47, had been a customer at his local bank since he was seven years old — almost 40 years. He had his mortgage with them and had used bank loans to pay for his vehicles.

He owed $2,100 on his credit card and had overdraft protection.

But after his illness, his regular paycheques became welfare and disability cheques so he decided to explain his circumstances to the bank.

“I thought it was better to be honest with them because I wanted to stay in good standing,” he said.

In short order, he says the bank cancelled his credit card and the first time he went over his overdraft limit, they cancelled his overdraft protection. Crucially, they slapped a 10-day hold on personal cheques he received from family and friends.

Angry and in need of fast cash to pay his bills, he turned to one of the many payday loan outlets near his home in Vanier. He says they charged an $18 fee to cash his Ontario government cheques and gave him separate $100 loans.

At one point, he said the fast-cash operator charged him $193 interest and fees on a $300 loan.

Two years later, McCall’s bank had reclaimed his house and he was living in one room at the rear of a Montreal strip club. He said he was permanently broke, medicated for depression and unable to pay the money he owed.

 

It hurts to hear this story, but an independent study done by a lawyer at ACORN’s request found this is pretty much standard operating procedure. He found in the heavily French, lower income community of Ottawa called Vanier, “…there are 16 payday outlets in Vanier — about one for every 1,000 Vanier residents — and eight of them are within 1,000 metres of each other on Montreal Road. That’s 16 times the provincial average and 24 times the national average.” Name the country and this would be duplicated many, many times. Furthermore, its different from state to state, province to province. In Ontario, interest can soar to 600% for payday sharks, while next door in Quebec the cap is 35%.

There’s not a happy ending to this story, but at least in McCall’s case there were hard lessons. According to the Citizen:

 

“Robbie McCall said after two years dealing with payday operators, his family helped him pay his bills on the promise he would never borrow from the outlets again.

“It was like a monster out of control,” he said. “I was so embarrassed — my pride wouldn’t allow me to talk to anyone about it. You know that commercial where a guy jumps on your back to symbolize debt? Well, that’s exactly how I felt. It was crushing me.”

McCall, who in the past year says he has been able to move into a one-bedroom apartment and slightly improve his financial situation, warns anyone he meets to stay away from payday loan vendors.

“Never, never, never,” he said. “Underline it and put it in bold capitals. You’ve got to find a better way.”

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Renewable Energy Cooperatives

6222_logo1Gatineau         George Brown is the Ottawa ACORN pro bono lawyer, which is how I came to meet him and find myself in an interesting chat on a wide range of subjects in the lobby of the Best Western hotel in Gatineau across the river from the national capital in Ottawa in the shadow of Parliament Hill.  George is of course much more than a general in ACORN’s volunteer army.  He is also a former city councilor in Ottawa and the nominee of the New Democratic Party in the federal election in south Ottawa against a longtime incumbent.  He has been a key architect in putting together teams of law students to represent our members in the housing tribunal mediating disputes between landlords and tenants. Having said all of that it turned out that he has been a veteran of numerous microfinance, social enterprise, and cooperative endeavors both as an attorney and as a sparkplug.  He caught my attention, given my recent dip into the energy and power wars between coal and renewable energy sources, by telling me about the Ottawa Renewable Energy Cooperative or OREC, where he had helped do the legal work on a number of their projects.

OREC hasn’t been around but a couple of years and its cluster of projects are therefore still modest in scale but its basic organizing and business model is fascinating and speaks to great success to come.  First, it’s a cooperative, meaning that individual members own the operation and democratically are empowered to govern the business through their elected board and employed staff.  Each share costs $100 and the only qualifications are pretty much an Ottawa address and being over 16 years old.  Secondly, you also have the opportunity to invest in their projects as they come on the drawing board and ripen for financing.  The minimum investment is essentially $2500 with a lifetime limit of $100,000 to keep everyone on an even keel, because this is a good deal.  Thanks to a piece of provincial legislation in Ontario the local electric utility, or hydro as they call it in Ottawa, has to purchase 20 years’ worth of the electricity generated through such renewable projects at a set rate per kilowatt hour that pretty much guarantees the investor a 5% dividend yield for the first five years and then larger participation shares through the 20-year term of the investment.  Since the numbers are based on firm contracts the yield is certain, though by law they can’t formally “guarantee” the rate in case hell freezes over, which is becoming more unlikely every day with climate change.  No surprise that the cooperative was able to raise $3.5 million in its offerings so far.  Sweet!  The only surprise is that they only have about 150 members so far on their 500 member goal.  I’m shocked they don’t have lines in front of their door!

And, what do they do with that money?  They lease for a 20-year term land or roof space for their solar panels.  Many of their leases are with nonprofit or cooperative housing developments in Ottawa who are mission driven as well and love the fact that they are helping produce their own electricity.  Here’s what they say:

OREC currently has 7 solar rooftop projects, including five 10 kilowatt (kW) solar power projects on the rooftops of non-profit or co-op housing buildings across Ottawa, a 75 kW project on the roof of Samuel Genest School, and 50% of a 250kW solar rooftop project on a storage facility in the Dunrobin area. We lease roof space from the respective property owners for the solar systems and our investors benefit from the revenue received from the sale of power.

George is right.  OREC’s model – and of course the law that allows it! – are dynamite opportunities.  These are the kinds of ideas that we need to spread, and try for ourselves as well!

***

Dick Gaughan “Handful of Earth”

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Progress on Payday Lending and the Digital Divide in Canada

10872772_10205576017666745_904929552335494071_oChicago     Like clockwork the ACORN Canada staff continues the tradition of mid-December YE/YB or Year End / Year Begin meetings.  Getting snowbound in Montreal one year and caught again another year in Niagara Falls, convinced them that perhaps meeting in the USA made sense, given that plane fares was actually cheaper.  Several years ago we managed to meet in Miami on the coldest day ever for that time of year.  The other advantage of such locations has been the opportunity to meet with organizations on the US-side and compare notes, pick up tips, and generally keep current in the work.  This year found the crew in mid-20 degree temps in Chicago.  Meetings with Kim Bobo, Executive Director of Interfaith Workers’ Justice, Lawrence Benito, the ED of Illinois Refugee and Immigrant Rights Coalition, one of the leaders in the fight for immigration reform, and Ed Shurna, executive director of the unique and activist Chicago Coalition of the Homeless should add spice to the meetings as well.

Listening throughout the day to the reports from the offices, it was clear 2014 had been another banner year for ACORN Canada.  Almost 7000 members of their 70,000 were full payers on bank drafts giving the organization almost $200,000 of steady dues income to power the program.  The likelihood of a federal election next year also provided a fertile field for discussion about how ACORN can bundle our issues and leverage the campaign.  I may not have been in the United Kingdom but it sounded like the same discussion!

Perhaps the most interesting measures of progress were found in listening to the reports from the offices where solid work on both local and national issues was yielding big wins.

Scott Nunn, reporting from British Columbia, detailed a breakthrough in a new, locally-based strategy to stem the advance of predatory payday lending operations.  After preliminary discussions the city council in Surrey passed a zoning restriction pushing such stores away and limiting the numbers possible in our neighborhoods almost preempting our campaign.  We are also engaged heavily in this fight in neighboring Burnaby, so they could be the next city to fall.

Shay Enxuga surprised everyone with a report from Nova Scotia, the newest ACORN Canada outpost, with details on discussions and negotiations with cable internet provider, Eastlink, who seem ready to not only implement our $10 internet access plan, but to extend the program outside of public housing to the general neighborhoods.

The likely April consideration of the internet access by the federal commission could find itself under real pressure by the Rogers telecom plan for access we had won earlier in Toronto and now the Eastlink breakthrough.  Telus had seemed to be moving in British Columbia, but has stalled.  ACORN Canada may see an opportunity to expand the fight for the internet to be regulated as a public utility in the north as well?

Ottawa continued to win the staff awards for activity and took the prize after spirited competition.  Toronto is leading with more work on an exciting initiative to increase the living wage.  The coming convention in June in Montreal should see ACORN Canada expanding the organization there in 2014 and meeting hundreds coming to make decisions for the organization.

I hated to have to leave the meeting early.  There’s great work happening in the north!

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A Joint Study with Ottawa ACORN Asks Important Questions about Voting and Polling Places

hagenNew Orleans    Community Life Services, a community service wing of the University of Ottawa, worked with ACORN Canada in Ottawa on a fascinating project that is now starting to take shape and produce some interesting conclusions – and questions – about the ways that the placement of voting stations may curiously and adversely impact the ability to vote.  Questions frankly, which should in fact concern us no matter the country where we are voting.

The research over a series of municipal elections in Ottawa over the last 10 years started with the question of whether or not voting locations were placed based on population density, i.e. appropriately where the most registered voters lived, or whether they were sited based on where the most people voted, in other words based on voter turnout.  Philosophically, the research team of students and professors thought that the most democratic placement method would have been by population density, in essence encouraging voters regardless of their voting histories, but suspected they were placed to reward frequent voters more than potential voters.

What they found was a mixed bag of almost unintelligible mischief.

At one level the early results seem to indicate in Ottawa that voter turnout was not the driver.  In fact surprisingly the numbers indicated that the more voters turned out in various geographical areas, the fewer polling stations they received!  

But on the other hand they also found that in wards like those including Vanier, one of the lower income, highest population areas in the city, when compared to other districts of the ward, they were disproportionately underrepresented with significantly fewer polling places.  Adding injuring to insult, the polling stations in the 10-years of elections studied also tended to be more mobile in the lower income areas with frequent moves.

The results and the full report are due to be released soon in Canada and will also be published in the summer issue of Social Policy magazine, but the questions are critical and not studied enough in these times when elections are so contested and contentious.  Groups are lining up on both sides of the political aisles in the United States to elect Secretaries of State in order to try to put their fingers on the voting scale and tilt turnout their direction.  The same has frequently been the pattern in city and county election commissioners throughout the land. 

This rock needs to be turned over for a good look to see if voters are on equal footing come Election Day.

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Rap Comes to Remittance Justice Campaign

New Orleans   On ACORN International’s Remittance Justice Campaign too often “civilians,” regular citizens, don’t have a clue about the predatory costs of moving money backwards and forward between where families and workers are now and their home country.   All of this made it exciting to get emails in recent days from ACORN Canada organizers, Jill O’Reilly in Ottawa and John Andersen in Vancouver, that a popular Somali-Canadian rapper maned K’naan had put out a song on YouTube about remittances, called “Fifteen Minutes Away.”

The politics weren’t perfect but he hit the high note, that it was “whack” to see how much it costs and implicitly that remittances were necessary for survival, which made the predatory practices of Western Union possible because a financial lifeline could be just “fifteen minutes away.”  K’naan’s rap includes “protest poetry,” so we have high hopes for him in the future.  Our favorite lines were right up front:

Yeea,
Im sending this one out to anyone who’s had to wait on a money transfer, yea its kinda whack when they charge you like 10 percent on the dollar but you know how good it feels when they say..

(chorus)
You can pick it up today, its 15 minutes away.
You can pick it up today, its 15 minutes away.

Below find this catchy theme song for the Remittance Justice Campaign, and the Wikipedia entry on K’naan which makes it clear that this is an artist of the people, who still “gets it!”  We’re reaching out, but we need a lot more like him!

K’naan’s Wikipedia Entry:

Born in Somalia,[3] K’naan spent his childhood in Mogadishu[4] and lived there during the Somali Civil War, which began in 1991. His aunt, Magool, was one of Somalia’s most famous singers.[5] K’naan’s grandfather, Haji Mohammad, was a poet. He is Muslim,[6] and his name, Keinan, means “traveller” in the Somali language. He spent the early years of his life listening to the hip-hop records sent to him from America by his father, who had left Somalia earlier. When he was 13, K’naan, his mother, and his three siblings, older brother, Liban, and Sagal left their homeland and joined relatives in New York City, where they stayed briefly before moving to Canada, to the Rexdale neighbourhood of Toronto,[7] which has a large Somali community. His family still resides there.[8] There, K’naan began learning English, partly by listening to hip hop albums by artists like Nas and Rakim. Despite the fact that he could not yet speak the language, the young K’naan taught himself hip-hop and rap diction, copying the lyrics and style phonetically.[9] He then also began rapping.[10] While growing up in Rexdale, K’naan lost many friends to murder, suicide, prison and deportation.[11]

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Lower Remittance Fees Now!

IMG_0529Ottawa In the final event of the first ACORN Canada Convention members gathered in front of the National Bank of Canada, assembling to raise the demand to lower bank and money transfer fees for remittances.  With Parliament looming over them car after car honked in support of lower bank fees.   Hardly a struggling immigrant driving a cab along the street didn’t lean on their horn, understanding the issue precisely.

A popular radio broadcast on politics on CBC had interviewed Kay Bisnath of ACORN Canada and ACORN International shortly after 8 AM in a national broadcast.  A piece had run in the daily paper, Ottawa Citizen, made the campaign clear.

The nearly 100 protests left the Bank of Canada, responsible for regulations, to make the same demand at the offices of the Finance Minister Michael Horgan.  We didn’t get far.  Police blocked the doors and locked them quickly, as the members chanted below and beat the plastic trash receptacles to a drum beat, calling on the Minister to “come down, meet the people!”

FIMG_0526inally using police as embassaries, Marva Burnett, outgoing president of ACORN Canada and other leaders were able to get their message up and get the answer down.  The deputy finance minister agreed to study the issue and issue a response.  The finance ministry communication director came down and parsed a few words indicating they had read the Citizen and heard the news, and would “study the matter.”

A mild response, but a step forward because truly this is an issue where there is every indication that the government is totally clueless of the issue despite the huge impact.  Back-of-the-envelope figuring had put the cost of excess fees, defined as fees above the G-8 and World Bank target of 5%, sent by immigrant and new Canadians back to families and communities in their home countries as being over $500,000,000 per year!

IMG_0532Members had prepared a “giant invoice” as chant leader, Pascal Apuwa, called it and after the Finance representative slinked away, a chant rose for the giant invoice to be left and collected.  Marva Burnett placed it pointing inside the locked doors of the ministry.  I am categorically clear that a small piece of history was made here, since I am confident that in the history of social movements over thousands of years, these members may have been the first to chant “GIANT INVOICE!”

Nonetheless, the chant makes the point.  This is a huge bill, now past due, that needs to be repaid to the poor and migrant works and immigrant families around the world, being exploited by money transfer organizations and banks on a daily basis at the price of billions.

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