Author: admin

  • South Carolina the saga continues

    Here’s what the Gov. had to say after vetoing a new bill in S.C.:

    “Boiled down, it is this administration’s abiding belief that government’s role is not to protect people from their own actions, unless those actions in substantial form impact the lives of others,” Sanford said in his veto letter.

    Here’s what Advance America’s Jamie Fulmer had to say:

    “We’re certainly disappointed that he’s chosen to veto that bill.
    It is still our hope that this bill will become law this year.”

    Am I missing something here? Why did they pass the first bill that capped the maximum loan amount at $300?

    You can read the full AP article here.

  • Ohio heats up again

    Legislators are not happy with short-term lenders in Ohio. Today, lenders in Ohio charge a small fee on a loan and then, many, will cash the check for a fee. Some lenders cash it as a convenience.

    The essense of the bill is to stop short term lenders from getting licenses under other statutes that are construed as pro-lender.

    I, personally, get a kick out of the Representative’s “holier than thou” quote:

    “I want them to know when this thing comes out of the gate that this means business,”

    You can read the full article titled “Rep. Matt Lundy introduces bill to combat payday loan clones.“

  • NSF fees under fire from law makers

    “Overdraft charges bring in big-time revenue for banks and represent one of the biggest slices of the short-term unsecured credit market — bigger than credit card over-the-limit penalties and much bigger than payday loans. Indeed, overdraft penalties are short-term loans, and they can be even costlier than their payday cousins.”

    “Michael Flores, CEO of Bretton Woods, a consulting firm that works for both payday lenders and banks, estimates that overdraft fees brough in $34.7 billion in revenue for banks and credit unions in 2008, compared with $7.3 billion for payday lenders.”

    These quotes were pulled out of the Huffington Post. Bank over draft fees are a big reason payday loans are in such high demand. Just on the Internet, payday loans and related keywords was searched over 750,000 times according to Google. If we factor in Yahoo and MSN it’s probably over 1,000,000 searches. This is just the Internet. Let’s not forget the brick and mortar operations.

    Consumer groups are constantly attacking payday loans, but they never address the demand side of short term cash. These groups think they’re helping people, but their doing two things to hurt them:

    1. Forces payday loans underground and offshore.
    2. Inhibits personal responsibility or promote financial literacy.

    If you want to read reports on the validity of payday lending, you can view them here on PDL Industry.

  • Progress Illinois is one-sided

    Progress Illinois’ Adam Doster is an opponent of payday lending. He writes for a blog titled Progress Illinois. He’s been blocking my comments on his posts b/c they conflict with his personal self interest.

    He’s a self proclaimed activist, which means he has an ego the size of a Volkswagen.

    I think this is a form of censorship. Please leave him a comment on his most recent post and let him know what you think. The other side of the story should be heard. If he’s just going to run a propaganda machine, he should be upfront about it.
    http://progressillinois.com/2009/5/29/present-votes-predatory-lending#comment-7081

    He’s saucy b/c a poorly written bill that would have capped rates in Illinois died a slow painful death in the executive committee of the House. Why didn’t it pass? It was a knee jerk reaction aimed solely at payday lenders.

  • Same story different state

    Wisconsin is the latest state to propose a 36% cap on loans. Currently, Wisconsin does not cap rates. The average rate is about $20 per $100, roughly an APR of 521% for a 14 day period. A 36% cap is $1.38 per $100. You do the math.

    With all this being said, I think congressman is a bit disingenuous:

    “Wisconsin is the only state that does not set a rate cap for licensed lenders, said the plan’s author, Rep. Gordon Hintz, D-Oshkosh.”

    It’s one thing to not have a cap. It’s another thing to make it 36%. That’s just putting people out of business.

    Wisconsin does not have a ton of stores. As of 2008, there were 530 store fronts.

    You can read the full article in the Chicago Tribune. To read the response from the Wisconsin Deferred Deposit Association, head over to Payday Pundit.

  • Still holding our breath in Illinois

    SB1435 is stuck in the executive committee of the Illinois House. It’s a bad bill in my opinion, which is typical when you aim it at one group of people.

    It’s status is: “Motion Do Pass as Amended – Lost“

    Two more days until this bill dies on Friday, May 29th. You can read more about the bill’s details here.

  • Confused in Nevada

    Handy Cash, of Nevada, filed for bankruptcy after the state dropped a $160k fine and under the stress of a class action lawsuit.

    I’m getting some conflicting information in Nevada. One source tells me the rates are capped at 40% interest. If you go to CashNetUSA, they charge $25 per $100 loaned and you can renew up to 3 times. I don’t see it as a tough law to follow.

    Here’s what I don’t get: “The newer rules also were supported by the Community Financial Services Association, said the organization’s Nevada Team leader, Mark Thomson.” The law can’t be that bad in Nevada.

    You can read the full article here. If anyone knows the scoop, let me know.

  • Lenders hold their breath in Illinois

    Legislators have hacked a bill together in Illinois that will try and lock out smaller, local lenders. This bill can expire May 31st when the general session ends. Other possibilities is and extended session, if the budget does not get balanced. If the bill dies, everything starts over in November. It’s currently in the Executive Committee of the House.

    Originally, SB1435 capped rates for loans greater than 120 days at 99% interest. My feeling was that many toes outside of the payday industry would be stepped on, which would slow down the bill. This bill has been beefed up since my original post titled, Illinois Trying to Cap Rates at 99%.

    This bill is basically getting rid of smaller lenders b/c the big payday lenders can survive operating under the PLRA loan structure. The pricing for CILA (installment lenders) is there for the Houshold Financials and American Generals of the world that lend between 36-100%.

    Here are the details (talk about knee-jerk):

    1. 99% APR cap on all loans of $1000 or less; 36-70% APR cap on loans between $1001 and $4000; 36% APR cap on loans over $4000
    2. 20% gross monthly income requirement
    3. Minimum loan term 180 Days
    4. No dual licensing – only CILA or only PLRA
    5. Database check on CILA loans
    6. Only one CILA loan per customer
    7. Ban on balloon loans in CILA – all must be fully amortized
    8. No postdated checks

  • Americash getting sued in Illinois

    Attorney Tom Geoghegan thinks that Americash is breaking the law by offering installment loans. The industry has been offering installment loans as an alternative to payday loans since 2005. I have to imagine that there is already a precedent for this type of case in Illinois. Besides, how can they be skirting a law, if they’re following another one?

    Of course, he’s probably going to try and turn it into a class action suit. That’s what attorney’s do. If they can refund one penny to 1000 people, you have to pay their attorney’s fees. These fees are exorbidant. They typically get into the six digits.

    The problem with these lawsuits is that you have to spend $25k just to fight them. If you win, guess what you get? Nothing. You just don’t have to pay these extorshionists….oops I meant class action lawyers.

    The article is titled: Are Payday Lenders Skirting the Law?

  • Online Loan Sharks Trap People Into Debt — Then Disappear


    Ok. Let’s get past the bullshit title of this blog post in the Huffington Post.

    Online payday lending is a completely different ball game. Most of the websites are lead generation companies. OLA has to become more transparent, if they want to be effective. I’m sure lenders do not want to advertise this way b/c it puts a big bull’s eye on their foreheads and makes them open to class action lawsuits.

    See this post about an Internet lender that settled a law suit in Wisconsin and what Nevada is doing about it here: http://pdlindustry.blogspot.com/2009/02/internet-lender-hit-with-60k-class.html and http://pdlindustry.blogspot.com/2009/02/nevada-intenet-lenders-under-fire.html.

    The reality is that there are a lot of off-shore internet lenders making a lot of money. They’re never going to stop, so you might as well allow payday loans here where we can regulate them. This issue is a lot like the offshore gambling.

    The reality is that the product has a huge demand. The numbers do not lie. Regulate it but don’t put lenders out of business b/c people will just go to offshore companies for a loan. While their at it, why not encourage store fronts. These lenders are all licensed and more accountable.

    If anyone has an idea to identify lenders that are licensed and regulated online, I’ll do it. I’ll even put them on my website.
    Read the Article at HuffingtonPost