Tag Archives: loans

Chase and Other Banks Need Policing & Regulation on Pay Day Lending Abuses

Little Rock       It takes a lot of newsprint and video clips to bring Jamie Dimon, the arrogant chief of JP Morgan Chase, one of USA’s largest banks, down but stories in the Times picked widely of Chase enabling predatory on-line payday lenders by allowing hundreds and thousands of overdraft and other fees to empty workers’ accounts when payday companies tried to collect payments scores of times over a matter of days.  He claimed he was going to fix the problem.  It is clear his fix is the same as the “fix is in,” and is a wave at the problem without any real reform.

Dimon and Chase claim they will only stop assessing NSF (non-sufficient fund) charges when an account is empty rather than continuing to kill the dead horse.  To respond to the problem with customers having paid off the loan but being unable to stop the payday predators from continuing to access automatic withdrawals, Chase claims they will “better train” their workers.  Are you kidding me?!?  That’s another way of saying, good luck, Charlie!  Chase claims that they will make it easier for customers to leave Chase and close their accounts to stop them from being raided with Chase’s help by letting people close if Chase itself deems the charges “inappropriate.”  They say they will alert the Automatic Clearing House (ACH) which manages the transfers about frequent abusers.  This is a bank tool, not a regulator!  This is no reform.  This is in fact is the same as saying you will do nothing, but simply using more words to say nothing.

Even more unbelievably though Chase is greeted with applause for doing nothing because Bank of America, Wells Fargo, and others said nothing, meaning they intend to do nothing or at least are waiting to see if they can get away with it.

Somewhere in all of this the fact that Chase and the rest are enabling a criminal conspiracy seems to be lost.  By allowing deductions they are “aiding and abetting” a crime since many of these on-line companies are skirting state laws capping interest and regulation payday lending.

Dimon and Chase are simply putting a fig leaf in front of the fact that they should be vetting the transfer process and instead are joining in the fleecing of their customers through illegal activity.

Jessica Silver-Greenburg reports that:

The changes come as state and federal officials are zeroing in on how the banks enable online payday lenders to bypass state laws that ban the loans. By allowing the payday lenders to easily access customers’ accounts, the authorities say the banks frustrate government efforts to protect borrowers from the loans, which some authorities have decried as predatory.

Both the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau are scrutinizing how the banks enable the lenders to dodge restrictions, according to several people with direct knowledge of the matter. In New York, where JPMorgan has its headquarters, Benjamin M. Lawsky, the state’s top banking regulator, is investigating the bank’s role in enabling lenders to break state law, which caps interest rates on loans at 25 percent.

Let’s hope the government acts quickly and aggressively, because Dimon, Chase, and the rest of the gang are clearly just shaving off a couple of pennies here while they help clean out working families bank accounts.  There ought to be a law, and in fact thanks to some states, there are laws.  Now we have to see if these folks are going to enforce the law, because that’s all that can stop this.

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Fire in the Mercado, Usury at Los Bancos

Tegucigalpa    Within minutes of hitting central Tegucigalpa we were on our way to a series of markets directly across the picturesque but fetid river running alongside the capitol not far from the original palace.  ACORN Honduras in Tegucigalpa had been working with stall vendors over the last month who had asked for help after a sudden fire overnight had wiped out the public market where they had been selling for many years.  More than a hundred had been displaced.

Signs of the fire were still everywhere, even though the space was bustling with activity where the shopkeepers were hammering, sawing, and constructing rough plywood type structures and shelving to hold their wares.  Next door another market had also been damaged and the bent steel and twisted sheeting was still being cleaned up and wheelbarrowed away.  The small merchants we met with under a blue tarp (the common cloth of disasters large and small) felt some satisfaction at the fact that a recent meeting with the Mayor had gotten the cleanup moving next door.  

What the merchants had on the agenda for discussion with us was their problem with banks.  They weren’t the only problem, but they were the boulders in the road to recovery.  To restock would cost each of them about $6000 USD.  They were worried of course that under their tarps their customers would diminish with the heat until some semblance of order was restored or the new building was long on the way.  Many of them had existing bank loans at 19% which they couldn’t pay and had been given some limited (and expensive!) forbearance for three months, but in trying to refinance to restock the same banks were now saying they wanted 28%, and they all wanted it now.  A look around made it clear that repayment was impossible.  Dilcia Zavala, ACORN’s organizer, said there was a law that mandated forbearance for up to a year after disasters, but even meetings with the Mayor and Governor had not seemed to convince the banks to relent from their harsh terms.

These banks were not local moneylenders.  Talking to the small vendors the names sometimes sounded local like Banco Pro Creidito, but that bank was German.  HSBC and Citi both were involved and have visible offices in central Tegucigalpa.  This was big business and a 28% it was usurious.

We had research to do, but clearly the only hope that these women had to not end up as sharecroppers in the square for international banks the rest of their lives was if they had some leverage.  The only leverage seemed to be to force the government to give the law enough teeth to buy some time so that they could survive in the marketplace long enough to get on their feet, even though they might be shackled later with 28% interest.

They call this disaster profiteering for a reason!

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