On April 4, Iowa CCI members met with Representative Dave Loebsack’s (IA-2) staff in Iowa City to urge him to join the growing number of co-sponsors to HR 1579 – the Inclusive Prosperity Act.  Our visit was in conjunction with dozens of similar actions across the country aimed at building momentum and support for common sense legislation that would finally begin to make Wall Street pay its fair share.

HR 1579 would impose a small sales tax (much like everyday people pay on daily goods and services) on Wall Street transactions, including high frequency trades, that could bring in hundreds of billions in new revenue a year – revenue that would be invested in creating new economy jobs and strengthening vital public services.

Our message to Rep. Loebsack was simple – this is how reduce inequality in the United States and get our economy back on track to serve everyday people.

Politicians these days talk about where they’re going to find the money to do x, y, z… well, this is a solution” – Iowa CCI member Jeff Strottman

This is about Wall Street finally beginning to pay their fair share – Iowa CCI member Lynn Gallagher

You could defend a vote for this bill in any town in Iowa across political parties – Iowa CCI member Jim Walters

Join us in encouraging Rep. Loebsack and others in Congress to take a meaningful step in making Wall Street pay its fair share through bringing forward the Inclusive Prosperity Act by clicking here.  And stay tuned for more on what you can do this spring and summer to push our elected officials to champion policies that Put People First!


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Payday lending fees cost everyday Americans $3.4 billion every year, including $37 million in Iowa


Iowa CCI members call on Iowa legislators to take action by passing interest rates caps


The Center for Responsible Lending just released a scathing report about payday lenders and the predatory nature of their high fees and interest rates in the United States, and found that payday lending fees – above and beyond the original loan amount – cost everyday, hardworking Americans $3.4 billion every year. http://www.responsiblelending.org/state-of-lending/reports/10-Payday-Loans.pdf

In Iowa alone, individuals paid over $37 million in fees in 2012. According to the report, there are 218 payday loan operations in Iowa. Each one averages 3, 904 transactions every year.

Iowa is one of 29 states without meaningful regulation, despite popular public support of regulation of payday lenders. Payday lenders trap people in a cycle of debt, near impossible to escape. 90 percent of payday borrowers go to individuals with 5+ loans per year. Fees and penalties add up to an annual interest rate near 400 percent.

Lacking legislation at the Iowa Statehouse, cities have taken action under the leadership of local Iowa Citizens for Community Improvement (Iowa CCI) members. Seven cities – Des Moines, West Des Moines, Clive, Ames, Iowa City, Cedar Rapids and Windsor Heights – have already passed local ordinances that restrict where payday lenders can locate. Since the first ordinance was enacted, we have seen an almost 20% drop in payday loan shops in Iowa.

The Center for Responsible Lending states the strongest approach to regulating payday lenders is setting maximum APRs to eliminate the debt trap, generally 36 percent. For years, Iowa CCI members have pushed Iowa legislators for legislation to cap interest rates at 36 percent but legislators in both parties have failed to act.

“I have young family members who have taken out these loans and have gotten trapped in a cycle of debt,” said Robin Ghormley, an Iowa CCI member from Des Moines.  “It is outrageous that all of this money is going to out of state corporations and I think it’s past time that Governor Branstad and the Iowa legislature crack down on predatory payday lending by passing strong interest rate cap legislation during the 2014 session.”

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This article was originally published on April 25th at http://www.americanbanker.com/issues/178_80/new-regs-could-wipe-out-bank-payday-loans-1058655-1.html?zkPrintable=1&nopagination=1

WASHINGTON — Facing strict new guidelines on deposit-advance loans, banks must now decide if it’s worth their while to offer short-term credit to cash-strapped borrowers.

Industry observers are skeptical about the future of the loans, which are often likened to payday loans, following the release of new rules from federal banking regulators Thursday. Guidelines proposed by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. would place such tight restrictions on the loans that observers say they will likely no longer make economic sense to offer.

“This is their way of killing the product,” says Jeremy Rosenblum, a bank industry lawyer at Ballard Spahr.

Meanwhile, the Federal Reserve Board, which has drawn flak from consumer advocates for refusing to join the other two banking agencies, released its own views on deposit advances. The Fed also raised concerns about the short-term, small-dollar loans, saying that banks should consider the potential risks involved, including potential consumer harm and compliance risk. But its advisory did not include the detailed new standards put out by the OCC and the FDIC.

Reaction to the Fed’s advisory was mixed. Some consumer advocates greeted it with cheerful surprise, saying that its language is more aggressive than they had anticipated. But industry lawyers expressed the view that the Fed’s document won’t have a major impact.

Only six banks are believed to offer deposit advances today. Four of them — Wells Fargo (WFC), U.S. Bank (USB), BOK Financial (BOKF) and Guaranty Bank (GBNK) — are regulated by the comptroller’s office. The other two — Regions Financial (RF) and Fifth Third Bank (FITB) — are state-chartered banks that are regulated by the Fed.

The inter-agency split raises the possibility that banks supervised by the OCC will be chased out of the deposit-advance business, while those regulated by the Fed will be able to continue, at least in the short term.

The Consumer Financial Protection Bureau is eventually expected to issue rules covering both payday lenders and banks that offer deposit advances. That could make the split between the OCC and the Fed a moot issue, but it will likely take some time.

On Thursday, banking officials and consumer advocates pored through the documents from the OCC, the FDIC and the Fed in an effort to assess their likely impact.

The OCC and FDIC proposals, which will be opened for public comment next week, are virtually identical. They would require banks to review a borrower’s ability to repay a deposit advance loan based on their other financial obligations.

The proposals state that repeatedly offering deposit advances for extended periods of time to the same borrower, a process known as churning, is a sign of inadequate underwriting.

The OCC and FDIC would also prevent banks from offering more than one payday loan at a time and no more than one loan per monthly statement cycle. Some banks already use such cooling-off periods, but the two agencies raised questions about their effectiveness, suggesting that today’s cooling-off periods have loopholes.

“We have significant concerns regarding the misuse of deposit advance products,” Comptroller of the Currency Thomas Curry said in a press release.

The two agencies also said that a bank must evaluate the customer’s income, as well as inflows and outflows of their deposit account for at least six months, before underwriting a short-term credit. And it must reevaluate the borrower every six months. Delinquent or adverse borrowers would not be eligible for an advance.

The OCC and FDIC proposals would also bring scrutiny to third-party vendors that assist banks in offering deposit advances, particularly if the vendor gets a portion of the fees.

“The existence of third-party arrangements may, when not properly managed, significantly increase institutions’ legal, operational and reputational risks,” the OCC stated.

Taken together, the proposed restrictions raise serious questions about the continuing ability of OCC-regulated banks to offer deposit advances.

“My immediate reaction is that it’s going to be very difficult to offer these products,” says Lynne Barr, a banking lawyer at Goodwin Procter. “And in particular, the thing that strikes me the most is that the underwriting standards for these loans will be very difficult to comply with.”

The OCC’s proposed guidance has far more requirements on the underwriting of deposit advances than its previous guidance, issued in June 2011, did. Because of the costs associated with those detailed new underwriting standards, banks may begin to question the sustainability of the product, says Nessa Feddis, vice president and senior counsel at the American Bankers Association.

“It adds to the cost which goes to the sustainability of the product,” Feddis says. “Either costs go up or the product gets eliminated.”

Rosenblum, of Ballard Spahr, lamented the fact that the OCC and FDIC did not deal with the question of where consumers will turn for short-term, small-dollar credit if banks no longer provide it. (Bankers suggest that payday lenders will be the beneficiaries of a crackdown, though regulators are also encouraging banks to offer consumer more sustainable short-term loan products.)

But Rosenblum also noted that a footnote in the OCC document states that the proposed guidance does not apply to overdraft lines of credit, which are credit lines that get accessed when a customer overdraws his account.

“So you could do a product that shared some characteristics with these deposit advance products if you structured it formally as an overdraft line of credit,” Rosenblum says.

Consumer advocates rejoiced Thursday over the OCC and FDIC proposals.

“Requiring banks to assess a borrower’s ability to repay and make loans that borrowers can afford to repay is just common sense,” read a statement from more than a dozen individuals who lead financial reform advocacy organizations, civil rights groups and consumer groups.

“Payday loans have decimating the bank accounts of some of America’s most vulnerable residents and we applaud the work of federal regulators to rein in these practices,” read a statement from George Goehl, executive director of National People’s Action.

The Fed’s three-page statement does not say that banks need to underwrite deposit advances based on the borrower’s ability to repay them — a key part of why industry officials see the OCC and FDIC actions as onerous.

Bank industry lawyers said they did not see a lot to worry about in the Fed’s statement. But lawyers at the Center for Responsible Lending, which had been expecting very little by way of a crackdown from the Fed, were pleasantly surprised by some of the language in the Fed document.

“We wish they would have come out as explicitly as the FDIC and the OCC,” says Kathleen Day, a spokeswoman for the organization, explaining that the organization wanted the Fed to match the other agencies’ proposals for strict underwriting rules and cooling-off periods. “But this is pretty good. This basically, in a more roundabout way, says much the same thing.”

The banks that offer deposit advances were largely silent about the looming regulatory changes.

Wells Fargo, Regions and U.S. Bank all said they were reviewing the proposed guidance and declined further comment. Fifth Third also declined to comment. A spokesperson for BOK Financial said the company was anticipating the new regulations and was in the process of reviewing them. Guaranty Bank did not return a call seeking comment.

On April 9, a leadership team of CCI members held meetings with both Assistant Attorney General Patrick Madigan and Troy Price, the Executive Director of the Iowa Democratic Party.

We had two very clear messages for them to deliver to President Obama – he must get serious about replacing Ed DeMarco as the director of the Federal Housing Finance Agency(FHFA) and he needs to immediately reverse course on proposing cuts to Social Security.

The Iowa Attorney General’s Office has worked hard to address abuses in the mortgage servicing industry and pushed for servicers to reduce principal on homes that are “underwater” – more is owed than what the house is worth.  Principal reduction is a common sense measure that would help keep people in their homes, save taxpayer money, and jump start the sluggish economy.

Standing in the way of any meaningful principal reduction is a man by the name of Ed DeMarco who oversees loans held by Fannie Mae and Freddie Mac.  It is in everyone’s best interest for this man to be replaced by someone who will move quickly to reduce principal on underwater homeowners.  And while we all must keep up the grassroots pressure on the Obama administration, we wanted to know we had another messenger who knows the ins and outs of principal reduction and the servicing industry – Attorney General Miller and his staff.

Following a productive meeting with Patrick Madigan, the Assistant Attorney General, members dropped by the Iowa Democratic Party headquarters to deliver the same message about Ed DeMarco as well as our shock that President Obama would willingly put cuts to Social Security in his budget to be unveiled on April 10.

President Obama has proposed to switch to the “chained CPI” as a way to calculate cost of living adjustments for recipients of Social Security.  The ugly truth is that the chained CPI is a benefit cut, pure and simple, and affects current recipients as well as future retirees.  This is even more insulting given the fact that Social Security has not, and cannot, contribute to the federal deficit.

We’ll continue to elevate these important issues with the media, elected officials, party leaders and the general public until we get assurance that policy makers are doing right by the American people when it comes to housing and retirement security.  And as long as Ed DeMarco remains at FHFA and Obama pursues the chained CPI for Social Security, we will not remain silent.


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Cordray hears from community before public hearing

Members of Iowa CCI and other allies met on the morning of March 28 in Des Moines and sent him back to DC with a broad mandate to crack down on predatory payday lenders and mortgage servicers.

“It’s a telling irony – not lost on some of us – that we even need such a bureau, that we need protection from a financial mafia that should be in prison… but instead sits in places of power.” -CCI member Judy Lonning

The CFPB and Director Cordray were in Des Moines to meet with grassroots groups tackling predatory lending. CCI, in partnership with other allies, hosted a closed-door meeting to discuss predatory financial institutions and the CFPB’s role in holding them accountable. Following the closed-door meeting, CFPB held a public community forum to announce changes to their consumer complaint database to better serve consumers who were wronged and bring to light the predatory lending institutions that are the worst actors in the field of consumer lending.

In our closed door meeting, CCI member Cherie Mortice laid out the devastating effects payday loans – both storefront lenders and payday loans pushed by banks like Wells Fargo – have on families and neighborhoods like the one where she lives on the east side of Des Moines.  “I live in a working class neighborhood and it doesn’t take much to push these people over the edge,” said Mortice.  “Payday loans tear apart the economic stability of neighborhoods like mine, and if we don’t have serious regulations placed upon this industry, the people will see this as just another shell game to punt off responsibility.”

Mortice called on the CFPB to issue sweeping regulations of the payday loan industry, including extending the payback period for these loans due in full on the borrower’s next payday, as well as prohibiting the use of Social Security checks as collateral for obtaining a loan to protect the most vulnerable.  She also urged the CFPB to publicly stand with other financial regulators and move immediately to halt big banks like Wells Fargo from offering similar predatory loans to their customers.

If you want to join Cherie and thousands of others in calling on federal regulators to get big banks out of payday lending, take action here.

CCI member Jess Mazour laid out many of the abuses in the servicing industry she witnessed with her time at Wells Fargo during the height of the recession and foreclosure crisis.  “It seemed impossible for someone to work through the system for help.  I hated telling people sorry your husband got cancer, or sorry you lost your job – but you signed this contract and this is the process.  It seemed so immoral to me.”

CCI member Larry Ginter called on the CFPB to use everything in their power to clamp down on fraud and abuse in the servicing industry.  He specifically called on them to require all servicers to offer a struggling homeowner a modification in good faith, and most importantly to require them to correct any and all errors made in a modification – something servicers are currently only required to acknowledge, but not correct. “Servicers are experts at what they do,” Cordray explained. “It’s just that nobody is holding their feet to the fire.”

Judy Lonning, a CCI member from Des Moines, ended the closed-door meeting by directing the CFPB to fully embrace their work for we the people.  “You and your agency represent hope that things can change.  We need you to go over the heads of the financial elite to address in meaningful ways the grave injustices resulting from a climate where anything that maximizes profits has been regarded as fair game.”



CCI members Cherie Mortice and Larry Ginter are in Washington, DC today meeting with top officials from the Obama Administration to discuss the ongoing housing and foreclosure crisis.

The meeting, organized by National People’s Action and the New Bottom Line, brought together hundreds of community activists from across the country to push for widespread principal reduction as a way to stabilize the housing market and the economy.

Nationally, there are almost 16 million underwater homes, worth $2.8 trillion, that are $1.2 trillion underwater. Resetting those mortgages to fair market value would save the average underwater homeowner $543 per month, pumping $104 billion into the national economy every year. This would create 1.5 million jobs nationally.

Cherie and Larry had the opportunity to share their concerns with HUD Secretary Shaun Donovan and National Economic Council Director Gene Sperling.  The pair also met with representatives from Senators Harkin and Grassley.

For more information about the housing crisis, and to share your own story, visit www.homeiswherethevoteis.com.