Google Steps Up and Bans Ads from Payday Lenders

054985500_1441013137-google-headquarters-sign-640x0_digital_trendsNew Orleans   Just because we’re chasing them, doesn’t mean that payday lenders are on the run, but recently we got a break that could end up as a fatal blow and perhaps stiffen the backbone and open the eyes of those unwilling to confront the predatory practices that define the business model of payday lenders. Google or Alphabet or whatever they are calling themselves are one the largest tech companies of the world, and they have now announced that forthwith they would no longer accept advertising from payday lenders. Hooray!

A number of consumer advocates weighted in with congratulations, and, surely, this was a win that undoubtedly came after extensive behind-the-scenes meetings, but no matter how the result was achieved, it’s a significant victory. In the highly competitive online advertising world, hopefully, it will be “monkey see, monkey do,” and followed by Facebook, Twitter, and the hundreds of other sites and applications that worship that almighty ad dollar. The payday lenders association, or whatever that gang of hyenas call themselves at the predators’ ball, cried “foul,” and claimed they were doing a public service in stealing from the poor, but they were left with no recourse. Google is a private company after all, and not some politician they can just ply with a campaign donation or sic their lobbyist on.

All of which calls into play whether or not tech companies might be good targets for more and more campaigns, and that’s worth some thought. Even while we praise Google, we shouldn’t make the mistake of thinking that they will be pushovers if the history and ideology of tech companies is any guide.

Apple certainly waged a huge battle under Steve Jobs and his successors to prevent unionization of its contract janitors, and to this day, unless something has changed recently, solved the problem by simply taking the work in-house as direct employees rather than deal with the union. Many of these tech companies and their execs are Ayn Rand fanboys and hard leaning libertarians. The role of Microsoft’s Gates and Facebook’s Zuckerberg in trying to privatize and charter up public school systems is now legendary, where often their main partners are the Walmart Foundation and its conservative crew. Michael Bloomberg and Charles Koch coauthored an op-ed recently where they wanted to get their two cents in on the amount of free speech on college campuses where they are afraid that administrators and professors are bending over too far to kowtow to minorities, women and others that might built the power to object to some of the baked in dogma opposing their interests. Austin, Texas voters just had to administer a butt whipping to the ride-sharing Batman and Robin, Uber and Lyft, who wanted to allow their drivers to not be fingerprinted like other drivers in that city. Facebook is taking heat as well for slanting its newsfeed and creating an echo chamber. Amazon seems the most Teflon, since it seems to still be consumer crack.

The good thing is that at their current size, none of these tech behemoths can just hunker down and hide in Silicon Valley anymore. To the degree that public perception and buying power still is a major part of what makes them winners or losers, we may have some collective power to punish the baddies, like payday lenders, that we need to exercise even more by putting tech companies on our “must target” list.


Robber Barons behind Payday Lending and Their Enablers

MoneyMartNew Orleans   In trying to take a close look at payday lenders, we’re always interested in who the money bags are behind these predatory lenders who are feasting on lower income and desperate families. It’s not a pretty picture and the perhaps the worst snapshot comes from looking at one of the world’s big outfits, Money Mart, and the man ultimately holding the purse strings and the profits, John Grayken.

Talk about a robber baron, this guy specializes in what is euphemistically called “distressed” properties, but more often seems to be simply anyone distressed and desperate. He’s a billionaire of course, joining the Forbes list this year with over $6 billion to his name. He owns something called Lone Star, which of course is headquartered in Dallas, where his career began doing deals with the Bass Brothers and their oil fortune. He started flipping properties for them in partnership with the Federal Deposit Insurance Corporation (FDIC) back in the savings and loan crisis, and you could almost say, he’s gone down from there with a gaggle of private equity funds and more bottom fishing. An article in Forbes in March, doesn’t draw a pretty picture of his work:

Since the Great Recession Grayken has made a specialty of buying up distressed and delinquent home mortgages from government agencies and banks worldwide. He’s also picked up a major payday lender, a Spanish home builder and an Irish hotel chain. Regulators hassle him, and the homeowners whose mortgages he owns or services despise his tactics. In fact, he has become accustomed to taking shots from detractors and has been the subject of protests from New York to Berlin to Seoul. Last year New York Attorney General Eric Schneiderman reportedly opened an investigation into Grayken’s heavy-handed mortgage-servicing tactics, including aggressive foreclosures, which have unleashed widespread outcries from homeowners, housing advocates and trade unions.

The “major payday lender” was Dollar Financial Services (DFS) which specializes in pawnshops and payday lending through its ownership of Money Mart, the largest predatory lender in Canada with other offices around the world, including the United Kingdom where it is also the largest payday loan operator through the Money Shop, along with other brands.

Before Dallas he was a Massachusetts native, though he has now renounced his US citizenship for an Irish passport in order to pay less taxes, meaning he can’t spend more than 120 days a year on US-soil. I doubt if this is the kind of “inversion” that fellow billionaire, Donald Trump, is talking about stopping if he ever gets to sleep in the White House. Grayken is really a citizen of nowhere, and pretty much in trouble almost everywhere he operates for his predatory tactics.

Sadly, predatory lending and vulture acquisition of foreclosed homes pays well, so the returns on his equity funds are in the double digits, and, according to Forbes, they have made this robber baron especially popular among pension funds. Oregon is a good example though they are not the only ones slurping from this poisoned well:

The Oregon Public Employees Retirement System has invested $2.2 billion in many of Lone Star’s funds. In 2013, for example, it committed $180 million in Lone Star Fund VIII and has already posted annualized net returns of 29%. A $4.6 billion fund Grayken raised in 2010 has returned 52% per year to Oregon pensioners.

When you start following the money in the predatory, payday lending world, make sure you have a shower handy, because this is dirty, dirty business. Of course for Grayken and his jealous peers and greedy investors, this is just the way business is done. Done to us, that is!