Post by notknowmuch on Apr 20, 2013 4:27:00 GMT -7
A Sad Day for Alabama and Its Citizens
By Don Gowen
Taking My Ball and Going Home: Predatory Lenders Respond to Reform Efforts
By Stephen Stetson
By Don Gowen
A coalition of over 150 Alabama organizations under the banner of The Alliance for Responsible Lending in Alabama, along with the Governor, Superintendent of the Alabama State Banking Department, and a bi- partisan group of Alabama legislators from both the House and Senate, came together at the start of the 2013 Regular Session of the Alabama Legislature to address the issue of predatory payday and title pawn lending in the state. Currently, consumers pay triple-digit rates for car title and payday loans (including those offered at traditional storefronts, oneline, and by banks).
After extensive research and development, the coalition under The Alliance for Responsible Lending in Alabama introduced HB320 in the House and SB282 in the Senate for payday loan reform and HB462 and SB331 in the Senate for title pawn lending reform. HB320 and HB462 were referred to the House Financial Services Committee for review, consideration, and favorable report to the floor of the House for vote.
However, on March 7, 2013, HB421 written by and for the TITLE PAWN INDUSTRY as “smoke and mirrors” for title pawn lending reform was introduced by Representative Lesley Vance and Co-Sponsored by Representatives Greer, Sanderford, Bridges, Buskey, Robinson (O), Johnson (R), Hurst, Long and McClammy. HB421 does nothing to reform title pawn lending and is a farce. One must ask one’s self WHY would duly elected representatives of citizens of their District be supporting predatory lending practices in the Alabama Legislature?
But it did not take long to find out that HB421 was greased on the skids by the lobbyists for the payday and title pawn industries. On the very next working day of House Financial Services Committee, HB421 was brought up and passed out of Committee with a favorable vote of all in attendance, except one Representative. WOW! One of the swiftest bill processing in the Alabama Legislature in years, but with every high-paid lobbyist in the state supporting HB421, the citizens of the state did not stand a chance. A representative of the predatory lender stated “I think the bill we currently have is something that works well for the industry.”
But on April 10th, 2013, the Alabama House Financial Services Committee held hearing on HB320 (Payday Loan Lending Reform) (introduced and referred to the Committee on February 21, 2013) sponsored by the Alliance for responsible Lending in Alabama, the Governor, and Superintendent of Banks, and (5) bi- partisan Representatives, - and HB462 (Title Pawn Lending Reform) (introduced March 20, 2013 – original bill introduced 02-21-13) sponsored by the Alliance, the Governor, the Superintendent, and (and 28 bi-partisan Representatives).
House Financial Services Committee Chairman Steve Clouse was absent from Committee which was Chaired by Representative Lesley Vance who had introduced the title pawn bill – HB421 and got it passed favorably out of Committee on March 13, 2013. After approximately (10) individuals testified before the Committee in support of HB320 (Payday Loan Lending Reform) and HB462 (Title Loan Lending Reform), and Lobbyist Jerry Spencer and a spokesman for Borrow Smart Alabama (a payday loan organization) made a couple of “spin” comments, Co-Chair Vance made the announcement (without taking a vote – the decision had been made before the hearing started) that the Committee was carrying over the bills for more study by the Committee’s Subcommittee – the same Representatives that had access to the bills for weeks and had just conducted a hearing before the general public.
With standing room only by the highest paid lobbyists in Alabama supporting the title pawn and payday loan industries, Co-Chair Vance made the statement “Let’s take the bill that’s been passed out [HB421 – the industry bill] – and Representative Scott’s bill (HB462 – Title Loan Lending Reform Bill), and let’s make it one bill to protect consumer”. To enhance their legacy of service to the consumers of Alabama, all the Committee had to do was to pass out of Committee HB320 and HB462 for floor votes in the House but instead they sold their soul to the predatory payday loan lobby. Not what should be expected of our elected representatives and a SHAME! The consumers of Alabama lost another one to predatory lenders.
After extensive research and development, the coalition under The Alliance for Responsible Lending in Alabama introduced HB320 in the House and SB282 in the Senate for payday loan reform and HB462 and SB331 in the Senate for title pawn lending reform. HB320 and HB462 were referred to the House Financial Services Committee for review, consideration, and favorable report to the floor of the House for vote.
However, on March 7, 2013, HB421 written by and for the TITLE PAWN INDUSTRY as “smoke and mirrors” for title pawn lending reform was introduced by Representative Lesley Vance and Co-Sponsored by Representatives Greer, Sanderford, Bridges, Buskey, Robinson (O), Johnson (R), Hurst, Long and McClammy. HB421 does nothing to reform title pawn lending and is a farce. One must ask one’s self WHY would duly elected representatives of citizens of their District be supporting predatory lending practices in the Alabama Legislature?
But it did not take long to find out that HB421 was greased on the skids by the lobbyists for the payday and title pawn industries. On the very next working day of House Financial Services Committee, HB421 was brought up and passed out of Committee with a favorable vote of all in attendance, except one Representative. WOW! One of the swiftest bill processing in the Alabama Legislature in years, but with every high-paid lobbyist in the state supporting HB421, the citizens of the state did not stand a chance. A representative of the predatory lender stated “I think the bill we currently have is something that works well for the industry.”
But on April 10th, 2013, the Alabama House Financial Services Committee held hearing on HB320 (Payday Loan Lending Reform) (introduced and referred to the Committee on February 21, 2013) sponsored by the Alliance for responsible Lending in Alabama, the Governor, and Superintendent of Banks, and (5) bi- partisan Representatives, - and HB462 (Title Pawn Lending Reform) (introduced March 20, 2013 – original bill introduced 02-21-13) sponsored by the Alliance, the Governor, the Superintendent, and (and 28 bi-partisan Representatives).
House Financial Services Committee Chairman Steve Clouse was absent from Committee which was Chaired by Representative Lesley Vance who had introduced the title pawn bill – HB421 and got it passed favorably out of Committee on March 13, 2013. After approximately (10) individuals testified before the Committee in support of HB320 (Payday Loan Lending Reform) and HB462 (Title Loan Lending Reform), and Lobbyist Jerry Spencer and a spokesman for Borrow Smart Alabama (a payday loan organization) made a couple of “spin” comments, Co-Chair Vance made the announcement (without taking a vote – the decision had been made before the hearing started) that the Committee was carrying over the bills for more study by the Committee’s Subcommittee – the same Representatives that had access to the bills for weeks and had just conducted a hearing before the general public.
With standing room only by the highest paid lobbyists in Alabama supporting the title pawn and payday loan industries, Co-Chair Vance made the statement “Let’s take the bill that’s been passed out [HB421 – the industry bill] – and Representative Scott’s bill (HB462 – Title Loan Lending Reform Bill), and let’s make it one bill to protect consumer”. To enhance their legacy of service to the consumers of Alabama, all the Committee had to do was to pass out of Committee HB320 and HB462 for floor votes in the House but instead they sold their soul to the predatory payday loan lobby. Not what should be expected of our elected representatives and a SHAME! The consumers of Alabama lost another one to predatory lenders.
Taking My Ball and Going Home: Predatory Lenders Respond to Reform Efforts
By Stephen Stetson
How do predatory lenders react when a broad coalition of Alabamians line up against usury and high-cost loans?
Charles Hunter is a professional spokesperson for a highly profitable collection of businesses in Alabama – payday and auto title lenders. He recently penned a piece attacking critics of those industries, deriding “consumer advocates who have never set foot in a short term lending store and who get paid to advocate.”
One can’t help but wonder how much Mr. Hunter is paid to advocate for his position.
Let’s be clear on who he is talking about. Over the past year, several organizations have joined forces to form a coalition called the Alliance for Responsible Lending in Alabama (ARLA). Working together, groups such as the NAACP, Alabama Appleseed, AARP and the YWCA of Central Alabama (as well as my group, Alabama Arise) have pushed the Legislature to cap interest rates on the lenders’ most profitable products: 456 percent interest payday loans and 300 percent interest auto title loans.
These loans purport to help needy Alabamians, but instead take advantage of them. Far from offering a financial lifeline during a crisis, these loans trap borrowers in a destructive cycle of debt, deepening poverty and stripping wealth out of struggling families and communities.
The stories pile up like industry paychecks on Mr. Hunter’s desk: One person paid thousands of dollars on a loan without ever paying down a penny on the principal. A family’s only truck was repossessed because someone took out a title loan, resulting in a breadwinner getting fired because they couldn’t get to the job. A loan to pay for a funeral haunted the survivors for years.
These stories don’t budge Alabama’s high-profit lenders, nor do the Bible’s prohibitions on usury. When confronted with the devastating effects of high-cost lending, Mr. Hunter questions our integrity.
During this legislative session, some of the most passionate advocacy against usury has come from the Federation of Republican Women and the Alabama Citizens Action Program (ALCAP). Is this who Mr. Hunter means when he sneers at “self-appointed advocates for the working poor”? Perhaps Mr. Hunter is confused about the difference between grassroots volunteers and people “who get paid to advocate.”
Then Mr. Hunter repeats the industry’s public position: If you put regulations on us, we’ll close up our shops and go home. They contend that they can’t survive on a 36 percent annual percentage rate.
Here’s a concept to consider: In a democracy, the people set the terms under which businesses operate, not the other way around. And if the Legislature hears the cries of the folks being gouged by payday and title loans, maybe Mr. Hunter’s association can go to other states to find customers who don’t mind being preyed upon in their most desperate hours.
For now, ARLA and our allies are content to stand with Georgia, Arkansas and North Carolina – hardly known as “anti-business” states – which have run off predatory lenders and are surviving just fine without them. The only people in those states pushing to bring back payday and title loans are industry folks with eyes on potential profits at the expense of needy borrowers.
Consider another such state, Ohio, which passed a 28 percent rate cap, considerably less than what we’re seeking in Alabama. The Republican Speaker of the Ohio House, Rep. Jon Husted, said, “We did not ban small consumer loans. Rather, we capped the interest rate at a level that created a reasonable expectation that the borrower could pay it back. They would not be trapped in a cycle of debt. We didn’t ban small loans. We banned a defective product.”
Rep. Husted almost seems to be responding to Mr. Hunter when he said, “As an elected leader, I have always tried to promote the free market. I believe in the free market. I believe that free exchange between consumers and business with limited government intervention is important to our freedom and prosperity. But products that are in the marketplace that are defective by their very nature undermine the free market. They harm consumers and invite government intervention. For those who believe in the free market, they should understand that we are preserving, not harming these principles. [The industry] talks about 6,000 jobs lost, but we don’t believe that. And we know that there are more than 6,000 people that are trapped by these products.”
The predatory lending industry’s shrill reaction tells us that advocates have hit a nerve with an industry accustomed to getting its way. And the YWCA and Federation of Republican Women certainly don’t need me to stick up for them against a paid industry spokesperson lashing out to discredit a budding reform movement.
At the end of the day, the Alabama Legislature will have to make a decision about whether usury is the kind of “free market value” and “job creating environment” that is right for Alabama.
Until then, here’s hoping that the payday and title shops that paid for Mr. Hunter’s diatribe feel like they’re getting their money’s worth.
Charles Hunter is a professional spokesperson for a highly profitable collection of businesses in Alabama – payday and auto title lenders. He recently penned a piece attacking critics of those industries, deriding “consumer advocates who have never set foot in a short term lending store and who get paid to advocate.”
One can’t help but wonder how much Mr. Hunter is paid to advocate for his position.
Let’s be clear on who he is talking about. Over the past year, several organizations have joined forces to form a coalition called the Alliance for Responsible Lending in Alabama (ARLA). Working together, groups such as the NAACP, Alabama Appleseed, AARP and the YWCA of Central Alabama (as well as my group, Alabama Arise) have pushed the Legislature to cap interest rates on the lenders’ most profitable products: 456 percent interest payday loans and 300 percent interest auto title loans.
These loans purport to help needy Alabamians, but instead take advantage of them. Far from offering a financial lifeline during a crisis, these loans trap borrowers in a destructive cycle of debt, deepening poverty and stripping wealth out of struggling families and communities.
The stories pile up like industry paychecks on Mr. Hunter’s desk: One person paid thousands of dollars on a loan without ever paying down a penny on the principal. A family’s only truck was repossessed because someone took out a title loan, resulting in a breadwinner getting fired because they couldn’t get to the job. A loan to pay for a funeral haunted the survivors for years.
These stories don’t budge Alabama’s high-profit lenders, nor do the Bible’s prohibitions on usury. When confronted with the devastating effects of high-cost lending, Mr. Hunter questions our integrity.
During this legislative session, some of the most passionate advocacy against usury has come from the Federation of Republican Women and the Alabama Citizens Action Program (ALCAP). Is this who Mr. Hunter means when he sneers at “self-appointed advocates for the working poor”? Perhaps Mr. Hunter is confused about the difference between grassroots volunteers and people “who get paid to advocate.”
Then Mr. Hunter repeats the industry’s public position: If you put regulations on us, we’ll close up our shops and go home. They contend that they can’t survive on a 36 percent annual percentage rate.
Here’s a concept to consider: In a democracy, the people set the terms under which businesses operate, not the other way around. And if the Legislature hears the cries of the folks being gouged by payday and title loans, maybe Mr. Hunter’s association can go to other states to find customers who don’t mind being preyed upon in their most desperate hours.
For now, ARLA and our allies are content to stand with Georgia, Arkansas and North Carolina – hardly known as “anti-business” states – which have run off predatory lenders and are surviving just fine without them. The only people in those states pushing to bring back payday and title loans are industry folks with eyes on potential profits at the expense of needy borrowers.
Consider another such state, Ohio, which passed a 28 percent rate cap, considerably less than what we’re seeking in Alabama. The Republican Speaker of the Ohio House, Rep. Jon Husted, said, “We did not ban small consumer loans. Rather, we capped the interest rate at a level that created a reasonable expectation that the borrower could pay it back. They would not be trapped in a cycle of debt. We didn’t ban small loans. We banned a defective product.”
Rep. Husted almost seems to be responding to Mr. Hunter when he said, “As an elected leader, I have always tried to promote the free market. I believe in the free market. I believe that free exchange between consumers and business with limited government intervention is important to our freedom and prosperity. But products that are in the marketplace that are defective by their very nature undermine the free market. They harm consumers and invite government intervention. For those who believe in the free market, they should understand that we are preserving, not harming these principles. [The industry] talks about 6,000 jobs lost, but we don’t believe that. And we know that there are more than 6,000 people that are trapped by these products.”
The predatory lending industry’s shrill reaction tells us that advocates have hit a nerve with an industry accustomed to getting its way. And the YWCA and Federation of Republican Women certainly don’t need me to stick up for them against a paid industry spokesperson lashing out to discredit a budding reform movement.
At the end of the day, the Alabama Legislature will have to make a decision about whether usury is the kind of “free market value” and “job creating environment” that is right for Alabama.
Until then, here’s hoping that the payday and title shops that paid for Mr. Hunter’s diatribe feel like they’re getting their money’s worth.