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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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.

You can tell you’ve hit a nerve with Wells Fargo when…

… they reply to your newspaper ad with a 700-word letter trying to debunk it.

Last week, top Wells Fargo official Marta Codina submitted a letter to El Enfoque newspaper saying that “Wells Fargo & Company does not hold shares in any of the two private prison companies mentioned by the activist groups” and “it is regrettable that groups that defend certain causes issue mistaken opinions about us to push a political or social agenda.”

Plain and simple, they are worried about the effect that Iowa CCI’s organizing will have on the Latino community – a market which they largely control here in Iowa.

They’ve held staff meetings with local branches on how to respond to our members and gritted their teeth when members moved their money from Wells Fargo.

We replied to set the facts straight, publicly, once and for all.  Will Wells Fargo respond?  Who knows, but its fun to have a little back and forth with one of the biggest banks in the country. In the meantime, we keep organizing and building power.

Our response in El Enfoque:

 As readers of this newspaper have noticed, Iowa Citizens for Community Improvement has been working with our members and other community members to educate them on their financial options and encourage them to move their money to a bank or credit union that does not profit from the suffering of immigrant families, specifically moving their money from Wells Fargo.

 

Last week, Marta Codina from Wells Fargo tried to pacify those who are starting to realize that Wells Fargo profits from private prisons and does not have their best interests at heart.  She accused us of using misleading facts and pushing a political and social agenda.  Well, we do have an agenda.  Our agenda is worker and immigrant rights and dignity for all people.  Our agenda is a fair economy that works for everyone, not only the 1% and big banks that continue to get rich from the work of others.  We know that many people in the community feel the same and we continue to unite the community and demand justice for everyone.

 

Now many people are probably wondering about the facts.  Does Wells Fargo invest in the private prison company GEO Group or not?  The answer is that Wells Fargo misled you in its response.  Here is what we know:

 

According to documents that GEO Group filed on March 13, 2012 with the Securities and Exchange Commission: “Wells Fargo & Company reported that, as of December 31, 2011, it beneficially owned 4,446,026 shares with sole voting power over 4,398,614 of such shares, shared voting power over 794 of such shares, sole dispositive power over 4,300,251 of such shares and shared dispositive power over 80 of such shares.” On March 31, 2012, Wells Fargo reported they held 7.7% of all GEO shares, making them the third largest shareholder.

 

In addition to the stocks that Wells Fargo & Company own, Wells Fargo Advantage mutual funds separately controls over 2,815,200 shares in GEO Group. Wells Fargo Advantage administers those stocks for mutual fund holders, but the individuals don’t get to decide where they invest their money – Wells Fargo does.  It is Wells Fargo’s decision to have the mutual funds invested in GEO Group.

 

What does this mean?  It means that according to GEO Group, Wells Fargo has voting authority over the majority of its shares and the power to dispose of (or get rid of) the majority of its shares.  So, when Wells Fargo says they do not own shares in GEO Group, or that “Wells Fargo Advantage” actually owns everything and administers these shares on behalf of invisible third parties, either they are confused or GEO Group is, or they are simply attempting to mislead all of us.  Here’s what we say to Wells Fargo: It’s your name on the stock – get rid of it!

 

In addition to their investments in private prisons, Wells Fargo has discrimination problems.  In 2011, Wells Fargo was fined $85 million by the Federal Reserve after the Fed determined that Wells Fargo had intentionally pushed people of color with good credit into expensive mortgages and falsified loan applications during the sub-prime mortgage boom. This is the largest consumer lending fine the Federal Reserve has ever issued.  Wells Fargo is also under investigation by the Department of Justice, and was sued by the cities of Baltimore and Memphis. In all cases, Wells Fargo denies wrongdoing, preferring to settle out of court and sweep the wrongdoing under the rug.

 

Wells Fargo pushes products onto its customers, wanting to make as much money as possible through questionable insurance, unfair fees, and confusing charges for even having an account.  A member of ours purchased insurance though their Wells Fargo account and paid $40 a month.  When they needed to use the insurance they couldn’t because they did not have immigration documents.  Why did Wells Fargo sell them that insurance in the first place?

 

Wells Fargo is not hurting – in fact they are making more money than ever before.  In just January, February, and March of this year, they made $4.2 BILLION in profits.  Their CEO John Stumpf made over $19 million in 2011. They can divest in private prisons, stop their predatory practices and still make gigantic profits.

 

We hope that this clears up any doubts you may have about the actions of Iowa CCI members in the past weeks.  If you would like to close your Wells Fargo account we can help connect you with community banks and credit unions that accept Matricula ID, just call us at 515-282-0484.

 

We are not against friends and family who work at Wells Fargo, but we will continue to question the damaging policies that come from the CEO and other high ranking officials.  We call on Wells Fargo to divest, dispose of their shares in GEO Group as a signal that they will listen to their clients and the community and do the right thing.

 

We thank everyone who has contacted us about this issue and we will continue to be a voice for immigrant and worker justice.  We are not afraid.  Join the cause!

 

Learn More

  • Interested in moving your money? Read more.
  • Click here to read more on our work to hold Wells Fargo accountable.

Join the Fight

  • Join as an Iowa CCI member today or chip in $10 to support our organizing on this issue.
  • Sign up for our E-Mail Action list to get the latest updates.
  • Follow us on Facebook and  Twitter for more fun photos and live action updates.

 

LIKE and SHARE if you want these facts to spread far and wide!

You should have seen the smiles on the faces of the six CCI members who proudly closed their Wells Fargo accounts this morning. And, those of the three dozen others there to cheer them on. It was a fun action!

Members moved their money and closed $30,000 in accounts in protest of Wells Fargo’s investment in private prisons, financing of payday lenders and factory farms, and the bank’s questionable lending practices leading up to the financial crisis.

“Wells Fargo has taken money from our community, and given back pain,” said CCI member Gloria Aguilar, who closed a Home Equity Line of Credit, “I will not do business with Wells Fargo until they change their practices and put people before profits.”

Aguilar and other Latino members of Iowa CCI singled out Wells Fargo’s relationship with GEO Group, one of the largest private prisons in the country. According to the GEO Group’s proxy statement dated March 23, 2012, “Wells Fargo & Company reported that, as of December 31, 2011, it beneficially owned 4,446,026 shares with sole voting power over 4,398,614 of such shares, shared voting power over 794 of such shares, sole dispositive power over 4,300,251 of such shares and shared dispositive power over 80 of such shares.”

“Private prisons make money by tearing families apart, and it’s wrong for Wells Fargo to be helping them out” Aguilar said, “all we’ve heard from Wells Fargo is ‘no!’ and we’re here today to tell Wells that we’ll be saying ‘no’ to them until they change their ways.”

Iowa CCI will continue to encourage Wells Fargo customers across Iowa to close their accounts until the bank pledges to stop engaging in activities that profit at the expense of everyday people. Our efforts are part of a national big bank Move Our Money campaign.

Here are pictures from today’s action:

Created with flickr slideshow.

Learn More

  • Interested in moving your money? Read more.
  • Click here to read more on our work to hold Wells Fargo accountable.

Join the Fight

    • Join as an Iowa CCI member today or chip in $10 to support our organizing on this issue.
    • Sign up for our E-Mail Action list to get the latest updates.
    • Follow us on Facebook and  Twitter for more fun photos and live action updates.

     

    Click LIKE and TWEET to give Gloria, Amalia, Martina, Victor, Jess & Vanessa a virtual high five for moving their money!

 

Wells Fargo employees are having meetings about us. Yes, we are starting to get under their skin.

A  member from Marshalltown, Maria Alvarez, called and reported on her interaction with the branch manager when she closed her Wells Fargo account because of their investments in private prisons, predatory lending, and giant executive bonuses.

The manager was angry at her and angry at CCI that we had published an advertisement in the Spanish weekly newspaper (photo), El Enfoque, calling on the Latino community to move their money. He said the allegations about Wells Fargo’s investments in private prisons are lies and people are uninformed.

He also told her that there was a meeting of all employees at their branch to train them on how to respond to people raising the issue of Wells Fargo’s relationship with private prisons!  They had seen our ad in the newspaper and a lot of people are talking about it.  He told Maria that some women asked him to prove that Wells Fargo was not investing in private prisons, and another man who said he was from Latinos en Accion de CCI came and closed his account last week!

Maria, armed with CCI’s facts, laid it all out: Wells Fargo is the #3 investor in GEO Group, the second largest private prison company in the nation, with 4.7 million shares.  Wells Fargo has a significant financial stake in private prisons, not just a couple of shares. And between March 2011 and March 2012 they added over 800,000 shares. Not to mention that they finance factory farms, pay day lenders, and were sued for discriminatory lending.

The private prison industry contracts with federal and state governments to manage jails and have specifically targeted immigrant detention as an area where they can increase their profits.  Prison company Corrections Corporation of America (CCA) sat on ALEC’s Public Safety and Elections Task force which wrote Arizona’s anti-immigrant bill that passed in 2010.  Since then, copies of the law have been lobbied for and passed in more states around the country so that companies like GEO Group and CCA increase their profits from the suffering of immigrant families.  Organizations around the country are calling on Wells Fargo to divest from private prisons, but so far we have received a resounding NO.

Maria made sure to communicate that that she is not against him or other Wells Fargo branch workers, but the CEO John Stumpf and bank presidents who get giant bonuses and set the policies that value profit over people.

 

Join the Fight

Can you support our “Move our Money” team and join us for an action this Friday, June 15?

For more information on how to move your money, call Iowa CCI at 515-282-0484.

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