Tag Archives: payday lending

Impacting Systems with Campaigns

Oakland          As a special East Bay treat, I helped Francis Calpotura and Lisa Castellanos, run a fascinating workshop organized by In-Advance as part of their series of working with community-based organizations on impacting systems.  The topic for this session focused on developing campaigns.  My piece was to layout the scenario for a campaign on reigning in payday lenders and their predatory practices in lower income neighborhoods, using Oakland as a setting for the campaign.  I had shared pieces from ACORN Canada’s successful campaigns there with some additional material on the ACORN Hamilton bylaw effort going on now.  In-Advance had also distributed articles on ACORN’s H&R Block campaign as examples of another successful case study.

The biggest problem I had was the usual.  Doing some research while I was in Milwaukee early one morning on the law in California and the state of the industry so that the organizers would have some local context, I found myself getting angrier by the minute, especially since California legislation is often among the most progressive in the country.  Yes, Virginia, there was a law, but no Santa Clause except in the gifts it gave the industry through its toothless passivity.  The industry was licensed and capped at 15% directly on a maximum loan of 31-days with only one loan permissible every 90-days.  Sounds like it might work, doesn’t it?  But it allowed 360% APR on the loan once the rest of the fees were larded on.  There was also no central database that would determine whether or not a consumer did in fact get multiple loans, and the reports turned into the oversight board made it clear that there were frequently repeat loans.  The industry had beaten back an effort as recently as last year in 2018 to create a central database.  Furthermore, there seemed to be no penalties.  Listening to the small groups later describe their proposed campaigns, I wanted to do the campaigns even more than I wanted to hear about their excellent proposals about how such effort might be able to succeed in Oakland!

Francis Calpotura

The best part of the session was being challenged to be helpful on the issues the various groups were grappling with.  KidsFirst was trying to restore funding for healthy feeding programs in the school district with a share of the money coming in from the sugar sweetened drink tax.  Neighbors for Racial Justice were incensed that the city was spending $300 million on policing and didn’t make other issues a priority.  Mujeres Unidas y Activas, composed mainly of Latino domestic workers, found itself caught in constant defense of its immigrant members being deported and seeking asylum in the caldron of the Trump administration’s draconian policies. The Ella Baker Center was trying to bridge many of these issues as well as was the APEN and Mandela Partners, one that deal with economic justice for Asian-Pacific populations and the other that was a food coop trying to promote food justice.

At the end of the day as everyone went around, we all hoped we had pushed the needle forward enough to make not only a difference but create some power and change.


CFPB Finally Takes the Stick to Predatory Payday Lending Industry

New Orleans   The Consumer Finance Protection Bureau, a beleaguered federal agency much needed by consumers and much despised by the entire phalanx of Republican governmental officeholders, has released new rules for the payday lending industry. It wasn’t the full list of Christmas presents that many of us had sent the CFPB Santa Claus, but there were some pretty decent presents under the tree.

The key gift was a limit on loans to $500 and a cap of eighteen months between loans with a few exceptions that all could only be triggered based on an affordability or ability to pay standard. This is huge. As part of the national campaign ACORN Canada launched more than a decade ago in that country we arranged for an independent report by a recognized academic expert. The study found that the entire business model for payday lending companies – several of which were owned by companies in the United States – was premised on a constant churning of the loans that larded on interest and fees over a cycle of a year-and-a-half before a consumer could escape. This rollover is so baked into the current payday lending business model that the CFPB estimates that it will shrink the $6 billion industry by two-thirds.

The CFPB backed away from the issue of usurious interest rates on these loans, which has been ACORN’s key tool province by province in Canada in our fight with the industry. They also ended up walking away from similar predatory products like installment loans. On the other hand in conjunction with the Office of the Controller of the Currency they did slightly loosen restrictions on banks to allow more small scale personal loans for the lower income families demanding this kind of bridge financial assistance. Credit unions and community banks were largely exempted, and restrictions were lifted on smaller banks doing 2500 loans or less that are not more than 10% of their business. None of that is really enough, but it’s something.

One of ACORN’s most effective weapons in the fight against payday lenders sucking money from lower income families and neighborhoods has been our ability to win restrictive zoning codes, especially in the working class suburbs of Vancouver. The codes require distance from schools and some other facilities, like liquor stores, and from each other, which has limited new openings of such storefront outlets to a mere trickle.

Twenty states already have limits on payday lending in the US, but there is still a Scrooge hanging around these new rules that might protect our constituency in the other thirty states, and not surprisingly that’s in Congress. Elected representatives, long with their hands out for industry contributions and their arms locked with the industry lobbyists, have in some cases threatened to try to gut these new rules. The industry of course has threatened to sue to stop implementation now scheduled for 2019.

We’ve won a battle, not the war.