Safety Net

How to Stop Predatory Lenders Now

Payday lenders are extremely good at what they do. They present their predatory products as the solution to financial emergencies. They seek out and find low-wage workers through enticing commercials in English and Spanish. And, perhaps most ingeniously, they circumvent state laws in order to continue their shady lending practices. A great example of this last tactic comes from Ohio where payday lenders thrive despite regulations meant to curb them.

In 2008, Ohio passed the Short Term Loan Act, which established a number of protections against predatory payday lending and other small dollar loans, including setting a 28 percent rate cap on payday loans.

Not surprisingly, the Ohio payday industry immediately tried to overturn the law through a ballot initiative. So what did Ohioans decide? They voted overwhelmingly (64 percent) to affirm the Short Term Loan Act, including the 28 percent rate cap. (Fun fact: the Ohio payday industry spent $16 million on the ballot initiative effort, while opponents spent just $265,000).

For the past seven years, however, payday lenders have deliberately defied the will of Ohio voters by continuing to saddle consumers with triple-digit interest rates on loans—some as high as 763 percent. They do this by using two older Ohio laws—the Mortgage Lending Act and Small Loan Act—to take out different lending licenses that allow them to circumvent the protections put in place by the Short Term Loan Act.

There are now 836 payday and auto title lenders in Ohio—more than the number of McDonald’s in the state. These lenders are so good at bypassing state laws that every year they rake in $502 million in loan fees alone. That’s more than twice the amount they earned in 2005, three years before the 28 percent rate cap was set.

Even if every state had protections on the books, lenders would find new ways to get around them.

Unfortunately, payday lenders scheming to avoid state consumer protection laws isn’t just a problem in Ohio—it’s a problem throughout the country. Time and again, whenever states crack down on abusive, small dollar lending, payday lenders find creative ways to continue business as usual:

  • In Texas, payday lenders are dodging state laws by posing as Credit Access Businesses (a tactic also employed by Ohio payday lenders). By disguising themselves as a completely different kind of financial service provider—one that isn’t subject to the limits imposed on payday lenders—they are able to essentially continue to act like payday lenders.

The moral of the story is clear: even if every state had protections on the books, lenders would find new ways to get around them.

But the good news is that the Consumer Financial Protection Bureau (CFPB) can help to crack down on these abuses.

Earlier this spring, the CFPB released a proposed framework for regulations that would govern the small dollar lending industry. As currently written, however, it would leave a number of glaring loopholes that are ripe for exploitation by payday lenders.

For starters, the proposal doesn’t address the problem of unscrupulous online lenders. It also fails to address the main cause of payday debt traps: the fact that lenders aren’t required to determine a borrower’s ability to repay a loan, even as they continue to peddle more and more loans to “help” a consumer dig out of a hole.

The CFPB can’t eliminate all the circumvention and abuses by payday lenders, but it can help. To do that, it needs to issue the strongest rules possible—and soon. It’s been eight months since the release of the regulatory framework and the CFPB has yet to offer an official proposal. Low-income Americans across the country need the CFPB to act fast.

That’s why we at CFED launched the Consumers Can’t Wait Campaign—to call on the CFPB to release strong rules on payday lending now. Until the CFPB acts, the profitable practice of ensnaring millions of American consumers in debt traps will continue to thrive unabated.

 

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Safety Net

We Say We Care About Kids. Do We Really Mean It?

Americans are fond of saying that our children are our nation’s most valuable resource. But do our actions measure up to our words?

Certainly, if you ask people what they think about making high-quality, affordable early childhood care and enrichment opportunities available for everyone—not mandating them, but simply making them available—few, if any, would say they are opposed. This consensus is in part due to mounting research in neuroscience, public health, economics and social science that supports a simple conclusion: investing in early childhood benefits the development, wellbeing, and long-term health of children. We also know how to create, scale and support these social and educational programs—Head Start, for example—and make them accessible.

Nevertheless, not all children have an opportunity to experience high-quality early childcare, for the simple reason that we have chosen not to support universal access. So why aren’t we committed to ensuring these opportunities?

Our political discussions about early childhood tend to center on parents’ choices and responsibilities—on the need for parents to make good decisions for their young children. But wouldn’t a tighter safety net of opportunities and support make good decisions easier, and make parents less likely to stumble in their efforts?

Instead of casting aspersions on parents, we need a new conversation—one that places children and what is optimal for them at the center.

That’s what The Raising of America—a new, five-part documentary series—is trying to do. I’m proud to be a part of the film, which probes how conditions faced by young children and their families form the foundation for future success—both in school and in life.

In exploring the prolific data about the positive effects of quality early care on health, The Raising of America brings to light the consequences of our failure to provide adequate support for parents raising young children.

Our Experiences Shape Our Biology

In recent years, as the film shows, we’ve seen a gradual shift in the way we understand health. Medical professionals are now examining health outcomes through a more holistic lens. What we’ve learned is that health is profoundly influenced by socioeconomic factors seemingly outside of the healthcare system.

In a neighborhood that suffers from chronic poverty the odds are stacked against optimal health and development.

Study after study has shown that our experiences—positive as well as negative—influence the ways our biological systems develop and operate. We also know that children who live in high-stress homes and environments with a lot of concentrated disadvantage are most likely to have adverse childhood experiences, or ACEs. A higher prevalence of ACEs can affect children’s emotional regulation, which in turn can impair optimal learning. A child who has difficulty regulating his or her emotions is not likely to be able to stay in the classroom and learn. And a child who drops out of school is less likely to succeed in life.

We’ve come to understand that where you live matters to your health. In a neighborhood that suffers from chronic poverty—with a lower ratio of caregivers to kids, low employment, unsafe housing, community violence and physical decay—the odds are stacked against optimal health and development.

Yet with all of this knowledge, we still haven’t bridged the gap between data and practice by offering universal early care and enrichment opportunities.

The Choice We’ve Made

It strikes me that as a society we have accepted the notion that the challenges parents face are all “just part of raising a child”—that it’s not imperative for all children to have access to the high-quality early care that they need to succeed.

I would love to give working parents a sense that they are not alone in their experience—that there are countless others like them who want to be great parents but are struggling to give their children what they need. This sense of community in itself can be powerful and galvanize positive action.

What if together we called for the consideration of health and wellbeing in all of our public policy choices? Adopting this new framework might help us understand that policies that support safe neighborhoods promote not only crime reduction, but also physical and mental health and educational success.

Families cannot meet the demands of both our economy and raising children alone. It’s my hope that the larger conversation we’re launching—through ongoing research and with The Raising of America—will prompt a closer look at how we can develop an opportunity agenda for our nation’s children, and steer a course that puts the needs of children front and center.

I hope this is the moment when society looks at the status of young children and declares that it does not have to be this way, that we can change the experience of childhood. Let’s get started.

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Safety Net

We Don’t Need to Wait on Congress to Fight Homelessness

According to the National Alliance to End Homelessness, “On a single night in January 2014, 578,424 people were experiencing homelessness—meaning they were sleeping outside or in an emergency shelter or a transitional housing program.”

It is clear from the numbers alone that in communities across America—including where I live in Ocean County, New Jersey—federal, state, and local public housing assistance programs are not reaching nearly enough people.

I’ve experienced homelessness and I also volunteer at a homeless outreach center that provides clothing, blankets, tents, heaters, food, and other items that are essential to our local population of about thirty homeless individuals and couples. We also offer a hot meal and a safe place for people to gather and freely express themselves. Many of the people we serve refer to our center as their “safe house.”

Nobody in America should be dropped off to disappear in the woods when we have the resources to end homelessness.

At the end of a recent meeting at the center, a couple in their forties asked me for a ride home. They had blankets, coats, and foodstuffs—I suspected they didn’t want to traipse through the downtown business district and draw attention. I gave them a ride, and they directed me to the end of a large parking lot behind a supermarket. They unloaded their things from my car and then slowly disappeared into the woods.

It occurred to me that if they were stray animals, I could have brought them to a half dozen shelters where they would be taken in and cared for, no questions asked. But in my county, not only is there a shortage of affordable housing, there is not a single emergency shelter for homeless people. This is the reality in too many communities across America. It is not only painful to witness, it is also completely unnecessary.

One unutilized tool that could go a long way towards addressing the problem is the National Housing Trust Fund, established by President George W. Bush and Congress as part of the Housing and Economic Recovery Act of 2008. The goal of the Trust Fund is to provide revenue to build, rehabilitate, and preserve affordable housing for the lowest-income families, including people experiencing homelessness. The Trust Fund is unique in its aim to increase and preserve the supply of affordable rental housing for the very low-income, as most of the fund’s money must go to people who make no more than 30 percent of area median income. The Fund also increases homeownership opportunities for these households. While Fannie Mae and Freddie Mac recently started devoting some of their earnings to the Fund, as the original legislation intended, Congress—perhaps not too shockingly—has complicated and threatened the necessary revenues for the fund.

According to ThinkProgress, a recent example occurred in April 2015, when a House appropriations subcommittee passed legislation that halted funding for the Trust Fund. The legislation instead robbed Peter to pay Paul, diverting monies from the trust fund to another HUD program, HOME, which targets people who make 60 or 50 percent of median family income. The appropriations bill that passed the House ultimately maintained this provision. With its focus on the lowest-income people, the National Housing Trust Fund is a critical resource for fighting homelessness, and these moves to slash its funding imperil people who are on the verge of losing their homes.

In contrast to the Congressional inaction, some states—including Nebraska, Washington State, and Georgia—have created Homeless Trust Funds that allow local civic groups to access monies for emergency shelters and affordable housing.

In 2009, for example, New Jersey passed a law called The County Homelessness Trust Fund Act that authorizes counties to impose a $3.00 surcharge for each document it records. These revenues, administered by a County Homelessness Trust Fund Task Force, are then used to fund housing and supportive services to individuals and families currently experiencing homelessness or at risk of homelessness.

More than one-third of New Jersey counties have implemented the legislation, raising more than a million dollars for efforts to increase permanent affordable housing; prevent the eviction of Supplemental Security Income or Social Security Disability Insurance beneficiaries, including through payment towards rent, mortgage, or utilities; and provide supportive services for chronically homeless individuals who receive housing vouchers.

But despite bearing the brunt of Hurricane Sandy in 2012, Ocean County has yet to implement such a trust fund. So what can a community like mine do to convince its local political leaders to take action?

Along with other activists and members of the community affected by homelessness—including health care professionals, trauma experts, police officers, clergy, teachers, local politicians, homeless advocates, and small business owners—I am working to get the backing of our community by framing homelessness as both a values and economic issue. The Ocean County Board Freeholders has the final say on whether or not the county enacts a Homeless Trust Fund. They have public meetings twice a month, and we’ve agreed that we won’t leave their next meeting until we get either an acceptance of our proposal or a counter proposal for eliminating homelessness. Our point is that homelessness in our county must end now, and that’s non-negotiable.

With Congress impervious to the reality and needs of its most vulnerable citizens, county trust funds are just one approach we can take towards ensuring that every person finds the stability and shelter they need to survive and thrive.

We need to take this action and many more—because nobody in America should be dropped off to disappear in the woods when we have the resources to end homelessness.

Author’s Note: For more information on how we can capitalize the National Housing Trust Fund, visit NATIONALHOMELESS.org. To see how other states have gone about initiating Homeless Trust Funds, visit the Center for Community Change. If there are members of your community who are homeless or at risk of becoming homeless, please make sure your local political and civic leaders are aware of these avenues for addressing this issue.

 

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Media and Politics

How Congress is Spending Billions to Make Inequality Worse

So we’re going to be completely honest with you: taxes are boring. Deductions. Exclusions. Deferrals. Refundability. God help us. But stick with us for a minute, because tax programs are crucial for reversing skyrocketing wealth inequality and turning our upside down world right-side up.

Our new animation shows that the key to understanding this is to not think of them as tax programs—instead think of them as this:

HD-Tax-programs-Cannon-GIF-compressor

That’s right, gigantic congressional money cannons.  Because these tax programs take what would be government revenue, and give it out to folks to buy a house, go to college, or build a retirement nest egg or financial security for themselves.

At CFED, we like all of these things. We want low-wage workers to be savers and learners and homeowners and entrepreneurs. In other words, we want them to have the opportunity to build wealth. As we see it, while income is crucial for getting by, wealth is crucial for getting ahead.

But in America—the land of opportunity—wealth inequality is skyrocketing. The top 0.1 percent own about as much wealth as the bottom 90 percent combined. A typical single white male owns $28,900, while a typical single woman of color owns $200 or less. While wealth grows for those at the top, nearly half of Americans are mired in financial insecurity—one paycheck away from economic collapse.

NEW-HD-Wealth-Stats-compressor

…Which brings us back to those gigantic money cannons. According to our research, the federal government spent $620 billion to help Americans build wealth last year. That’s a lot of dollars shooting out of those cannons—more than $5,000 for every single household in the country.

So where’s your big benefit check?

Well, here’s the bad news: unless you’re a Walmart heir or regularly sport a top hat and monocle, those money cannons probably aren’t aimed at you. Remember that top 0.1 percent that owns as much wealth as the bottom 90 percent? A typical member of that elite club got $33,391 last year from the largest of these tax programs—roughly the sticker price of a Lexus or BMW. A typical American in the bottom 20 percent?  She got $77—roughly enough for a BMW’s hubcap.

NEW-HD-HUBCAP-compressor

In short, these upside-down tax programs are making wealth inequality even worse. There’s nothing wrong with rich people buying a new Lexus, but the rest of us just shouldn’t have to subsidize it with money that we could be using to get ahead.

It’s an expensive, inequitable, and wasteful way to help Americans afford housing, save for retirement, pay for college, and build financial security. It widens the wealth divide between the rich and the rest; between men and women; and between whites and communities of color. Instead of helping all Americans get ahead, we’re just giving a boost to the lucky few who are already at the front of the pack.

This isn’t going to change unless we speak up. Because you know who doesn’t think taxes are boring? The guy getting that Lexus-sized check every year. And you can bet he’s making his voice heard.

That’s why we made this animation. To fight for change, we have to understand the problem and the solution. We know that the government is already spending billions on wealth-building programs. We just want them to spend it smarter to help everyone get ahead.

As we enter 2016, the country is engaged in a debate on opportunity, inequality, financial security, and, yes, taxes. The Republican and Democratic presidential debates this week are two venues where this discussion will continue, and there will be many more to come. So let’s shape that debate instead of letting others shape it for us. Demand that our elected officials—and wannabe elected officials—commit to turning these upside-down tax programs right-side up. They say they want to reduce wealth inequality and grow financial security for all Americans—well, here’s an easy way they can do just that.

These policies are not going to change overnight, but to get there we first need to raise awareness about the enormity of the problem. Do your part: watch our animation, share the message, and sign up so you can stay informed and take action. Real change starts with you and a click, so do your part to turn things right-side up.

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Media and Politics

What Can Be Done to Restore Voting Rights

Our democracy is in a state of moral crisis. As we mark the fiftieth anniversary of the landmark Voting Rights Act this year, we’ve found ourselves with a political system that lets the most wealthy Americans spend a billion dollars to influence an election, but effectively blocks countless low-income people, students, and people of color from casting even a single ballot. And this disturbing reality is unlikely to change unless we demand action now.

Until recently, the history of political participation in America was one of forward progress, a timeline marked by an ever-increasing expansion of voting rights. The 15th Amendment in 1870. Women in 1920. And after decades of bloody struggle, the Civil Rights Movement—with the strong participation of Americans of faith—seemed to achieve true equality in 1965 with the passage of the Voting Rights Act. The Voting Rights Act is most celebrated for protecting the right to vote for African Americans, but it has also helped ensure that students, low-income Americans, and the elderly have been able to cast their ballots.

However, in 2013 the Supreme Court gutted a key provision of the Voting Rights Act—one that required states with a record of racially-motivated voter disenfranchisement to get approval from the U.S. Department of Justice before making any changes to voter laws.

The result? A flood of new restrictive voting laws are now blocking low-income people, people of color, students, and others from the ballot box. According to an analysis from the Brennan Center for Justice, during the 2015 legislative session alone lawmakers from 33 states have introduced or carried over 113 bills that would restrict access to registration and voting.

What do these laws look like?

They impose barriers that keep low-income people, people of color, disabled people, and other historically disenfranchised communities away from polls. Among these barriers are strict photo identification requirements, cuts to same-day voter registration, and reductions in the number of early voting days. In a state like Alabama, which implemented a strict voter ID requirement last year and just last month closed 31 DMV offices, the result is that poor, rural voters—large numbers of them African-American—will not have easy access to the IDs they need to vote without traveling to a different county and likely missing shifts at work to do so. Faced with these kinds of barriers, and struggling to get by in our age of extreme income inequality, how many low-income Americans can actually afford to pay these 21st century poll taxes to make it to the ballot box on Election Day?

Before the Supreme Court gutted the Voting Rights Act, laws like these would have likely never won approval from the Department of Justice. They would have been recognized and stopped for what they clearly are—attempts to disenfranchise certain classes of voters. Now, many are being challenged in the courts, but they’ll likely languish there for years in never-ending legal battles as election after election passes by.

Congress’ hyper-partisan “leadership” has refused to move forward with a badly needed reauthorization of the Voting Rights Act that would mend what the Supreme Court has broken.

What can people of faith—and all Americans—do about this moral crisis? Together, we need to convince Congress to act while also doing everything we can to protect voting rights in the states we call home. That means marching, protesting, petitioning and making our voices heard. We must expect no compromise, no consideration from those who seek to warp the electoral system in their favor.

To start, join the thousands of Americans who are calling on Congress to restore voting rights protections by signing the VRAforToday petition.

If you want to go a step further, look for opportunities to join protests and actions of civil disobedience. My organization, Bend the Arc: A Jewish Partnership for Justice, for example, recently organized vigils across the country to draw attention to voting rights. You can expect more actions like this from us and many other groups if Congress continues to stall on the bill before next year’s crucial national election.

To take direct action that protects voters, volunteer as a poll monitor with organizations like the NAACP Legal Defense Fund and Asian American Legal Defense and Education Fund. They need help assisting voters who are facing hardship or confusion from new voting or registration laws, or monitoring polling sites for discrimination on Election Day.

Other organizations doing great work on this front include the Leadership Conference on Civil and Human Rights, the ACLU, the Brennan Center for Justice, and Rock the Vote. Sign up for emails from these groups and you will find many more opportunities to get involved.

This is a tough fight, but it’s a fight we can win if we all pitch in. Together, we have the power to force congressional action just as our parents and grandparents did fifty years ago when President Johnson signed the Voting Rights Act into law.  Let’s make them proud.

 

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