Archive for category Payday Lending

Getting CORC’ed

Last night was the annual meeting of the Coalition of Religious Communities (CORC).  The Coalition represents 20+ denominations thoughout Utah.  Members of CORC work on a broad array of social justice issues, primarily issues of economic justice – although we were also one of the leading groups supporting effective hate crimes legislation.  CORC’s leadership is drawn from among pastors, lay leaders, and other group leaders.  CORC’s member communities include Quakers, Episcopalians, Unitarians, UCC, Lutherans, Methodists, Mennonites, MESJ (Mormons for Equity and Social Justice), Buddhists, Muslims, Jewish groups, and Church Women United (those are just the groups I remember from last night).  Broadly speaking, CORC members speak for well over 250,000 Utahns.

Last night’s meeting was one of my favorites.  The steering committee planned responded to requests to better understand the legislative process – from the very beginnings of “How does an idea become a bill ?” to how does a bill become a law.  So we created and planned a simulation designed to recreate the experience of the state legislature – from creating talking points in favor of your bill, to sending in notes and talking to legislators, to trying to persuade the leadership to fund a proposal.  We had two goals – first to illuminate the process by which ideas become laws and second to give people a chance to practice their lobbying skills.

The process worked better than I ever imagined it would.  Our “legislators” were every bit as passionately stuffy as the real thing, they even managed to use the arcane language known as “legislatese.”  We had amendments, we had “strike and replace.”  We had some fun debate and great conversations.

We also learned valuable things.

When talking to legislators, be prepared and organized.  Make your points quickly, succinctly and be prepared with more information.

Don’t try to fake it.  If you don’t know, say you don’t know and let them know you’ll get the information and get back with them.

Make certain you introduce yourself – name and who you represent and don’t be afraid to state up front what you want – i.e. “I’m Glen Brown and I’m a member of the Coalition of Religious Communities and I’m here today to ask you to support HB 931 – payday lender and check casher reporting requirements.”

Last but not least, don’t be intimidated by legislators.  A lot of people get intimidated and fritter around and get apologetic and never get to the point:  “Well I know that I’m not an expert on these things and I’m so glad you’re taking time to talk to me and hear what I have to say and what I’ve to say is really important because it’ll help poor people and babies and apple pie and if you vote for it you’ll do a lot of good.  So really, you taking time to talk to me is so important and I know I’m just a citizen who comes up here and my voice isn’t very important but . . .”  and ten minutes later the legislator is still baffled as to who this person and what he/she wants. 

CORC is a unique group – one that employs the religious passion for social justice to get people active and to get them united in ways they might not do on their own.  CORC’s work in the community has done a tremendous amount of good in Utah.  Our latest and biggest successes has been getting the sales tax on food reduced.  There was no action on this for years, no legislator interested in taking it on.  CORC members around the state organized and talked to legislators and created sufficient buzz in every corner of Utah that state legislators heard about it wherever they went – it’s time to remove the sales tax on food.  It’s time to remove the sales tax on food.  It’s time to remove the sales tax on food.  The sales tax on food isn’t all gone, but much of it is (basically you’re paying the city and county portion these days, not the state portion).  CORC has consistently taken the lead on this issue for years.  And it pays off, it takes time, but it pays off.  And that is the secret of success in social change.

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Solving the payday lending problem

A friend in the Mayor’s office has gently pointed out that my Wednesday payday lending post was unduly harsh.  Salt Lake’s council and administration are working on a solution.  They want to create an ordinance that isn’t slapped together, that actually does some good.  And that means doing all the work in the right way – follow a good process to get a good outcome versus throw something together and be forced to fix or undo it in the not so distant future.  I trust the folks I know in City government to do the right thing the right way and I just have to remember that.

I get angry about payday lending – about the way in which payday lenders make life harder for their customers and then like tobacco companies pretend they are pure of heart and providing some service no one else will provide.  Even the ads for payday lending are part and parcel of the con game; remember the TV ad where mom just wants to buy the stuff for little Suzie’s birthday party but daddy took all the money to go golfing?  So mom runs to her local payday lender and throws Suzie the party of her life.  How about the more recent one where payday lenders tell consumers to read the paperwork, know the rates and fees and then warn consumers that payday loans may not be the answer to financial problems?  Kind of the like the surgeon general’s warning on cigarettes.

In dealing with the problem of payday lending, there are a number of issues that can trip up the process.  The state won’t act and the cities don’t have the power to reform payday lenders so we’re left with doing our best to keep and eye on them and force payday lenders to behave themselves.  So what’s up in Salt Lake City?

First, a moratorium cannot be renewed and runs for six months.  Read the rest of this entry »

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Those payday lenders aren’t gonna regulate themselves!

Three years ago, former Salt Lake City council member Nancy Saxton proposed an ordinance to regulate payday lenders in Salt Lake City. The ordinance – identical to that used in West Valley, Taylorsville, Midvale, Sandy, and South Salt Lake – was sent to planning where it has been languishing.

Some of the dysfunctions of Rocky Anderson’s administration are to blame for that state of affairs. We know that the City planning department has had it’s share of problems:

Salt Lake City’s planning division as a nonsupportive, micromanaged den of dysfunction plagued by cynicism, chronic turnover and politicians masquerading as planners.
The 125-page missive says, “Sadly . . . in far too many cases,” residents are viewed as “the enemy” by both management and staff.
For the past decade, “the ineffective process feeds on itself and then continues to degenerate into ever-increasing dysfunction,” reads the report by Citygate Associates, which will be presented to the City Council today.

However, with Ralph Becker securely in office and a majority of coucilmembers who want to regulate payday lenders, we should get some action, right?  Wrong.

The payday lending ordinance is bottled up in planning, trapped.  City council won’t act without staff and administration leadership; the administration can’t act until they fix the mess in planning. 

So it’s just stalled.  It’s time to act.

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The Credit Game

Watching the mortgage meltdown go from bad to horrific to George Romero has got me thinking about credit in general.

Credit is an odd thing; the more credit you use the more credit worthy you become.  Even if you are making insane purchases, so long as you make your monthly payments, you can get more credit – and probably easily.

By contrast, a person who rarely uses credit faces trouble getting credit even if they have never missed a payment, never declared bankruptcy, never been financially irresponsible.  A friend of mine was trying to buy a house a couple years back.  He’d always paid his bills on time, didn’t have credit cards, had his car paid off.  He couldn’t get a mortgage even though he made good money.  He went out, opened a credit card account, bought some stuff, paid for it, bought a small car, made the payments, then qualified for a mortgage even though he was deeper in debt than he was initially. 

Think about this – if you use credit reguarly, keep your payments current, you can get more credit at often extremely low rates.  On a regular basis, my friends and coworkers complain about the flood of credit card offers they receive.  Many of them offer zero percent interest for balance transfer for 12 months or longer.

The credit card companies are making the good bet that you won’t just use their card to reduce the interest rate on your revolving credit.  Consistently, American consumers have shown a willingness to continue to spend even when we’re out of money.  We will use our credit cards – and pay the interest, fees, and other charges that go along with them. Read the rest of this entry »

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Desperate People Do Desperate Things

  . . . .and keep payday lenders in business.

For the obvious reason that I just borrowed twenty some odd thousand dollars this week, I am thinking about credit issues which means I’m thinking about payday lending.

Here’s the deal: Saturday I went for a test drive. On Monday, I called the salesperson and said, “I want the car. Run my credit. Here’s my social security number.” He called me back about 20, maybe 30, minutes later and said, “You’re approved. Here’s the rate. When do you want to get the car?” (BTW, I got a screamin’ deal since VW is clearing out the 2006 stock.) Monday night I filled out the paper work, left the car for some treatments to protect the top and the seats, got a loaner from the dealer and went home. Tuesday at 5:30 pm, I took delivery of my new car. Total time invested, including the test drive: about 2 hours. The ease and speed with which I was able to access credit has me thinking about credit as a system.

Our system rewards people who use credit. I known women who, at 50 years old, found themselves unable to get credit because they’d always put everything in their husband’s name; widowed or divorced, they were locked out of the credit system and, in one case, unable to open a checking account in her own name even though she’d been writing the checks for years (she eventually brought her husband’s death certificate into the bank to have her name placed on the existing checking account). Other persons may have rarely accessed credit due to financial considerations – if you make minimum wage, the idea of a home mortgage is unimaginable, a car loan unlikely, credit cards largely inaccessible. Low income workers who make more than minimum wage may still be largely locked out of credit. Immigrants, persons in the military and elderly persons also have limited access to regular avenues of credit.

Many of these households are already struggling financially – if they aren’t already on teetering on the precipice of financial ruin – and manage to hold things together in good times. Even a minor setback can be disastrous – illness, hospitalization, car repair can cost far more than the family’s resources and then some. Faced with paying a doctor to treat a sick child or paying the rent, most families will pay the doctor. Prescriptions without insurance – even generics – can easily cost $100. Purchasing even a cheap car can devastate a family’s finances. Missing work isn’t an option.

The outcome of these financial problems is desperation and despair. Desperate people make desperate choices. When someone asks, “Well why don’t people go to a bank rather than a payday lender?” they’re either not aware or not acknowledging that reality. There are other issues – payday lenders are open later than banks. If I need emergency cash at 7:30 at night, chances are I can’t go to a bank and talk to someone. I can go to a payday lender. For people facing an immediate financial crisis, the payday lender – promising easy and immediate cash – is readily accessible, a way to stave off the disaster for two weeks, and a way to meet the money need right now. The individual at the payday lender’s counter is thinking “I have to pay the doctor now. I have to buy the medicine. I have to get to work tomorrow so I have to get the car fixed tonight.” They’re not thinking, “Let me amortize this loan amount on my financial calculator.”

And that’s how the industry functions. It’s not the happy people in the TV ads – Dad at the golf course, Mom at home with the kids trying to buy a cake for little Susie’s birthday party. It’s desperate people trying to figure out a way to squeak by for another 14 days.

And that’s why people use payday lenders – not because they just can’t wait to spend their money on luxury goods, not because they’re too stupid to not pay 520% interest. Because faced with dire choices, they have gotten desperate and desperate people do desperate things.

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