Last December, Senators Grassley and Ernst had a chance to stand against predatory payday lenders and stand with hardworking Iowans. Instead, Grassley and Ernst voted to confirm Kathy Kraninger to run the Consumer Financial Protection Bureau (CFPB), the federal regulator charged with policing Wall Street and predatory lenders.

After just two months on the job Kraninger is proposing to gut consumer protections against payday lending which Richard Cordray’s CFPB spent 5 years working to craft. Kraninger wants to eliminate a requirement that payday lenders confirm that a borrower can repay a loan while managing other expenses as well.  The CFPB’s own research found that 80 percent of payday loans are taken out to pay back earlier payday loans.

She isn’t doing this because they are popular, as payday lenders are despised by Democratic and Republican voters alike. Payday lending costs Iowans millions of dollars per year, and the average payday loan-consumer in Iowa has taken out 20 or more, usually just to pay back their earlier debts.

If there was ever a time for Grassley and Ernst to stand up for working Iowans, it was in December when considering who would head the CFPB. And now that Kraninger is pushing to let payday lenders operate like it’s the Wild West, Grassley and Ernst could speak out against the proposal.

But so far not a peep. Thankfully we have a chance to weigh in, as the CFPB has a comment period before they make a final decision. Please submit a comment. And then, let Grassley and Ernst know that they missed a chance to stand with everyday Iowans by confirming someone who would rather protect predatory loan sharks than their victims.

Thanks for your work to focus #SharkWeek on the financial sharks we all want to stop!

Your signatures called on the Consumer Financial Protection Bureau (CFPB) to issue broad and strong regulations on the consumer lending industry. Payday and installment lenders rip off  hardworking Americans everyday by charging outrageous interest rates  – often exceeding 300 or 400%!

Didn’t sign yet? Find the petition here!

That’s why we dedicated Shark Week to telling the stories of loan sharks and payday borrowers. The newspapers ate it up; check out the coverage!

The Hill: Activists to unleash ‘Shark Week’ attack on payday lending industry

The Nation: This week, Look At the Real Sharks: Payday Lenders

Yahoo Finance: Payday lenders face scrutiny for abusive lending

Yahoo Finance: The reign of payday lenders may soon be over

Chicago RedEye: ‘Shark Week’ protests fishy lenders

#SharkWeek didn’t end when Discovery’s Shark Week ended – the week’s activities were complimented by an in-depth investigative series on payday lending’s devastating effects on families in Iowa. All of this culminated in the first ever Des Moines Register editorial on the payday lending issue and the need for lawmakers to take bold action!

Des Moines Register: It’s time lawmakers deal with payday loans

Des Moines Register: Payday lenders burying Iowans under a pile of debt

Des Moines Register: Federal action against payday loans picks up

There is still time to make sure the CFPB knows you want strong regulations against this predatory industry. Sign the petition today

Stay tuned for when the legislature comes back into session in January 2015! 

 

Join the Fight

 

 

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.”

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

The Daily Iowan Editorial Board writes an incredibly snarky editorial demanding the Iowa City Council crack down on payday lenders.

Read it online:  http://www.dailyiowan.com/2012/04/10/Opinions/27837.html

 

Beware the fat man scam

BY DI EDITORIAL BOARD | APRIL 10, 2012 

We all see and hear obnoxious low-budget commercials for payday lenders, usually featuring a sweaty man yelling at us to take out a “quick and easy” loan to soothe our fiscal anguishes until payday.

We sit back in our chairs, immediately irritated by the fat, sweating man, wondering who on Earth would fall for such a blatant scam — but there is a clear market of suckers for these loans, saddling many towns and cities, including our own, with the burden to regulate them.

Ladies and gentlemen, it’s time the Iowa City City Council defend its citizens against the savage vulture capitalists.

Some groups, such as Iowa Citizens for Community Improvement, have requested the City Council limit the number of such stores by using zoning rules to drive the predatory lenders out of Iowa City.

A fantastic idea, considering that the financially unstable University of Iowa student population would be easy prey for the payday lenders to sink their teeth into — a little extra money for the weekend out? Absolutely.

In case you don’t know, payday-loan suppliers turn a profit by charging people a fee for a loan that the customer will pay back by a certain date, typically their payday (hence the name.)

If the customer is unable to pay the company back before the date, they are charged an additional fee, which often causes the customers to find themselves in debt and even more financially desperation that may have been the initial cause of their visit to the store.

Think of a credit card but in a stationary building with snake-oil salesmen and nearly instant cash; that’s how the lenders operate.

Payday lenders have a tendency to set up shop in areas of a lower socioeconomic status, because this group of consumers will not likely have the ability to pay the loans back on time; in turn, providing the lenders with an indebted client that they can continue to use for money.

And not only do these desperate and uninformed consumers use payday lenders, but they file lawsuits when they find themselves in financial trouble — a consumer trying to file a lawsuit against a cigarette company, despite the surgeon general’s warnings.

But still, actions against these corrupt companies need to be taken.

In an attempt to regulate these lenders, the FTC has charged some of these lenders with “piling inflated fees on borrowers and making unlawful threats when collecting.”

The Citizens for Community Improvement has persuaded the City Council to consider a regulatory zoning plan in order to take back control of the neighborhoods: Restricting the businesses to one for every 20,000 residents; two miles between other stores and one mile from residential areas, churches, parks, and schools; and finally, stopping new stores from opening in neighborhood and pedestrian retail areas. The proposal is under consideration by the Planning and Zoning Commission.

These are fantastic zoning requirements, because they pretty much stop new stores from opening, period — they kill the carnivorous annelid worms before they are born.

Though these measures are enticing, an easier, and certainly cheaper, way to fight back is to better educate the consumer.

Although this is a good goal, it is unlikely that the public would be receptive to government advice, and it would be like pulling teeth to get people to listen. The FTC warns consumers about the dangers of payday lenders and even provides them with reasonable alternatives to taking out these loans, and the City Council can work hard to better inform people to make better choices instead of just making the choices for them.

But the government should put the heavy weight of regulation upon them, just as it regulates the smoke sticks that kill or the adrenaline-pumped casinos that rob citizens of their savings.

So, we must push the City Council to decide to use its zoning power to slowly push out these dangerous lenders without completely eliminating them — to protect the public from the scam of the sweaty, fat man.

 

>>Read more about our work to stop predatory payday lending.

>>Contact us to get involved in the Iowa City or Ames organizing efforts.

 

Click “Like” or “Tweet” to share the snark and good message with your friends: