By: Trevor Brown

A dozen localities have adopted resolutions calling for the state to
block what the resolution calls “predatory, usurious lending practices” by
imposing an interest rate cap of 36 percent, calculated as an effective
annual percentage rate, that includes fees and charges that payday lenders
require. On May 27, Staunton City Council first adopted the resolution and
then sent letters to other towns, counties and cities in the state asking
them to consider doing the same.

Councilman Bruce Elder, who is spearheading the issue on council, said he
is “very pleased” so many localities have supported the issue. He said the
quick response gives him reason to be optimistic the momentum can convince
state legislators to pass new changes to payday lending practices during
next year’s General Assembly session.

Credit Union Journal
July 12, 2010

By: Ed Roberts

ALEXANDRIA, Va.-Credit unions are favoring NCUA’s proposal to deregulate
payday lending, but say the agency should drop proposed requirements that
could make it tougher to qualify for the short-term, small amount loans.

Commenters on NCUA’s proposed rule are supportive of the bid to raise the
interest-rate cap for payday loans to as high as 36% from the current 18%,
but say other provisions of the rule, such as requirements for direct
deposit, payroll deduction, length of membership and limits on loan
rollovers, will make it more difficult for credit unions to offer payday
loans, which are generally agreed to have negligible profitability.

The Arizona Republic (Phoenix)
July 12, 2010

By: Ryan Randazzo

Payday lender Advance America Cash Advance Centers Inc. is closing 47
stores in Arizona and leaving the market because of the recent change in
state law that limits interest rates it can charge.

The state no longer allows payday lenders to set interest rates as high
as 460 percent annually. A 10-year-old law expired this month that allowed
them to charge more than 36 percent, the cap imposed on other lenders, such
as banks.

Voters and lawmakers declined to extend the law.

“We are disappointed that we will be unable to continue serving consumers
in Arizona,” Advance America President/CEO Ken Compton said in a prepared
statement. “Advance America strongly believes that a regulated, competitive
and transparent financial environment benefits consumers. We believe that
consumers are best served when they can choose the financial service that
best suits their needs, and in many cases, that may be a cash advance.”

http://www.azcentral.com/arizonarepublic/business/articles/2010/07/09/201007
09biz-payday0712.html

States News Service
July 7, 2010

The following information was released by the National Association of Federal Credit Unions:

NAFCU on Tuesday said it supports NCUA’s efforts to encourage small-dollar loans by credit unions but told the agency its proposed rule needs to be more flexible if it wants to maximize participation.

NAFCU noted that, since the loans contemplated by the rule would generate little if any income, NCUA should be flexible on loan limits and the terms.

The proposal, released in May, is intended to give credit unions a safe way to offer short-term loans to members who might otherwise look to high-cost payday lenders. However, NCUA says it would not affect current small-dollar programs.

Standard-Examiner (Utah)
June 29, 2010

By: Janae Francis

June 29–OGDEN — Two local women are among a group that is angry about some new loans debuting at Utah credit unions.

Although the loans are advertised under a different name, those who are opposed to the offerings are calling them payday loans.

“I’m just highly offended and outraged that they would offer this kind of a loan,” said Nancy Groshart, of Ogden. “I think it’s worse than going to a payday loan place because at least they advertise that it’s a payday loan.”

Groshart is among a group that will protest this morning at 10 a.m. at a news conference sponsored by the Coalition of Religious Communities (CORC) in Salt Lake City in front of an America First Credit Union. She is a credit union and CORC member and has signed a letter to America First Credit Union.

BOILING SPRINGS, S.C., April 13, 2010 /PRNewswire via COMTEX/ —-Due in part to looming and uncertain regulations this year big banks are starting to look to new products and services in an attempt to minimize potential losses in the wake of these upcoming regulatory changes, reports Solomon Finance. Whether these changes will be profitable remains to be seen, but actions are already being taken to stop big banks like Wells Fargo and U.S. Bank from offering loans similar to those offered by the Payday Loan Industry. A recent report from the Center For Responsible Lending states, “Wells Fargo, which recently acquired Wachovia, has offered its Direct Deposit Advance product since 1994…… This growing trend may soon accelerate.”

One of the numerous concerns regarding these types of short-term loans being offered at big banks is this: whereas payday advance lenders are closely regulated by state laws, big banks are not. In fact, the same direct payday lenders, when offered by big banks, are regulated by the O.C.C. and are exempt to state regulations, some of which cap payday loans at 36% APR. This leaves big banks free to offer the exact same product as payday lenders, but at even higher APRs! In some states, such as Ohio, this practice has been going on for some time now and is quite frustrating to Payday Lenders, as demonstrated in this “comment of the day” from the Payday Pundit blog:

“I own a payday lending store operating in Ohio and Fifth Third has become a competitor… and they charge them (customer) $50. As a licensed payday lender operating under the existing law in Ohio I am only allowed to charge that customer about $28 to $30…How are they allowed to operate in our arena and not follow the same rules?”

Regardless of the outcome of banks offering short-term loans, consistent regulation applied to big banks and payday loan operators alike or deregulation of payday lending altogether should be considered to achieve an even-level playing ground. To see large banks dodging the same legislation that forced so many small business owners to close their doors is unfair. What is needed is balanced and fair regulation applied to allbusinesses, large or small or have no regulation at all.

To learn more, please visit Pay1Day.com Payday Loan Blog.

SOURCE Solomon Finance

QUITMAN, Miss., April 20, 2010 /PRNewswire via COMTEX/ —-Based on a NY Times article, “Consumer Financial Protection Agency: an overview,” the creation of the Consumer Financial Protection Agency (CFPA) was marketed as a precautionary step to protect consumers from “predatory” lending practices, and to help avoid another economic meltdown, reports Pay1Day.com. Protecting working class Americans after all, would be the primary function of this stand-alone agency so there wasn’t much opposition to the proposed CFPA other than a few small business and alternative lenders, such as direct payday lenders, who feared the seemingly un-restricted power of a new regulatory body. But now the opposition toward the creation of a stand-alone regulatory body seems to be gaining momentum every day as more and more details of the CFPA come under scrutiny of the media and other organizations.

For example, just recently the U.S. Chamber of Commerce announced that its grassroots efforts have succeeded in mobilizing small business owners, local chambers, and citizens to send more than 200,000 letters to their congressional members, voicing their strong opposition to the proposed (CFPA). It also seems that small businesses specifically are reaching out to members of Congress to express disapproval of specific provisions that hurt them. One of the primary concerns of these smaller businesses, who would possibly fall under the new proposed regulations, is that the new regulations would limit access to credit for them which could be detrimental to our economy’s recovery and growth at this time. Also, small businesses are not supporting these new regulations which are a direct result of the subprime mortgage meltdown that they did not cause.

While it seems that smaller to mid-sized businesses are at the fore front of the opposition, many citizens seem to be opposed to the creation of a stand-alone regulatory agency, as opposed to investigating other options. An article at the Denver Post states:

“Rather than creating a new financial watchdog agency within the Federal Reserve, why not strengthen the existing system?”

Why not, indeed? It is hard to imagine that there is not a less costly alternative to consumer financial protection if it were to be housed within an existing government body such as the Federal Reserve. And although consumers may need some financial “protection”, it is unlike consumer protection regarding dangerous products or chemicals in such that financial terms and disclosures are readily available to help consumers make their own informed decisions.

SOURCE Pay1Day.com

LOS ANGELES, May 17 /PRNewswire/ — Due to our current economic crisis, college students all over the country are making several changes in order to stay afloat financially and continue their education according to loan blog of direct payday lender Pay1Day. Whether just beginning their post-high school educational journey or chasing down a graduate’s degree, students everywhere find themselves making adjustments and changing existing trends in order to stay afloat amidst these tight economic times.

Some of these changing trends are reflected in a recent annual survey by the Princeton Review entitled “College Hopes & Worries Survey,” which surveys both college-bound high school grads and their parents. The study shows that 68% of students reporting high stress levels, and that the largest concern (37%) among parents and students alike is that they (the student) will be accepted to their first choice school but be unable to afford it especially when loans are difficult to obtain.

LOS ANGELES, April 27 /PRNewswire/ — Recently the media has begun to criticize those involved in writing the consumer protection language for the proposed financial reform legislation, or Consumer Financial Protection Agency (CFPA). Although coverage has begun to gain steam in the last few weeks, possibly due to the fact that our Senate is currently attempting to strike a bipartisan agreement on key features of the sweeping bill, we are still not seeing this issue on the radar of mainstream media quite as much as Obama’s recent Healthcare reform bill. It seems that Democrats may have learned from this recent experience and are attempting to keep this issue quiet, and slightly out of the view of the public. After all, whereas most Americans are very concerned about Healthcare reform for various reasons, a Financial Protection bill which will oversee regulation of not only big banks like Wells Fargo, but even Payday Lenders such as Pay1Day.com, is not of much interest or concern to the majority of Americans. Perhaps it should be, given who is writing the actual language behind the proposed bill.

Eric Stein, the ex-President of the Center For Responsible Lending (CRL), a non-profit group who claims to protect low-income Americans is drafting the consumer protection language in the proposed consumer protection bill. The CRL received a $15 million donation from billionaire John Paulson, who is known to have worked with Goldman Sachs to package bad mortgages into securities, and then push them on the market which helped lead to our current economic crisis. Stein is also being considered to be in charge of the CFPA, if the bill goes through. Some critics argue that Stein’s role in the CRL make him a risky choice to author the consumer protection language that is aimed to protect us from another financial crisis. He is also an interesting choice for Obama’s newly created position of “Deputy Assistant Secretary for Consumer Protection,” currently housed under the United States Treasury Department, considering he is an unelected official.

Some also argue that tougher consumer protection laws will limit short-term credit for individuals and small businesses, which would eliminate more jobs and ultimately harm our economy. Regardless of opinion, the creation of the proposed CFPA is something that will certainly affect us all as American consumers.

By STEPHEN GANDEL

Tuesday, Jul. 06, 2010

Unlike with regular lenders, payday loans are typically expected to be paid back in one lump payment. And the terms of the loans are usually pretty short, like from one to six months. The result is that most people who go to payday lenders — typically people who are already having problems in their financial lives — don’t end up paying on time. Their existing loans then get flipped into new loans with more fees. This process continues as long as it takes the person to pay back the loan. Often by the end of the process, the loan fees can amount to double or triple the size of the original loan.

Consumer advocates would like the CFPB to push for a rule that would limit the number of times a payday loan could be flipped into a new loan. After that, the lender would have to work out a payment plan that capped the loan’s final fees, or convert the loan into a typical installment loan with minimum monthly payments that could be made penalty-free.

Read more: http://www.time.com/time/specials/packages/article/0,28804,2001444_2001442_2001424,00.html#ixzz0t76gUitx