Opinion
Payday Lending Drains Economy
“Challenging People to Shape
a Better Future Now”
B ERNIE F OSTER
Founder/Publisher
B OBBIE D ORE F OSTER
Executive Editor
T ED B ANKS
Advertising Manager
J ERRY F OSTER
Account Executive
L ISA L OVING
News Editor
H ELEN S ILVIS
Multimedia Editor
B RUCE P OINSETTE
Reporter
D AVID K IDD
Graphic Designer
M ONICA J. F OSTER
Seattle Office Coordinator
J ULIE K EEFE
S USAN F RIED
Photographers
O
ne of the worst ironies of
the nagging economic
recession is that consumers
with the fewest financial resources
have lost the most. Now, a new
report finds that payday loans not
only strip much-needed income
from low-income families; but
also harms the economic viability
of the communities where they
operate, draining nearly $1 billion
a year. Written by the Insight Cen-
ter for Community Economic
Development (Insight Center), it
also reveals other net negative
impacts of these small-dollar, high
cost loans on economic growth
and personal bankruptcy filings.
The Insight Center examined the
net economic impact of the $3.3
billion in interest that borrowers
paid to non-bank payday lenders
in 2011. The study found that if
consumers collectively had an
additional $3.3 billion in discre-
tionary spending, it would have
resulted in $6.34 billion in eco-
nomic activity and created 79,000
jobs.
In comparison, payday lending
activity added $5.56 billion to the
national economy and created
65,000 jobs.
Combining these figures shows
a net loss from payday lending of
$774 million in economic growth
R ESPONSIBLE
L ENDING
Charlene
Crowell
and over 14,000 jobs — in addi-
tion to $169 million lost through
Chapter 13 bankruptcies.
The report states, “This nearly
$1 billion loss in economic activi-
“In addition, we estimate that
more than 38 people lose their
jobs each day due to the economic
drain of payday lending.”
Payday lending has been a cen-
terpiece of the Center for Respon-
sible Lending’s research and
policy efforts over the past
decade. CRL also supported the
new report’s development.
Earlier CRL research deter-
mined that each year 12 million
Americans become entrapped in
payday loans, taking out an aver-
age of nine loans per year. With
Research shows a net loss from
payday lending of $774 million in
economic growth and over 14,000
jobs — in addition to $169 million lost
through Chapter 13 bankruptcies
ty should serve as a strong signal
that, in addition to the well-docu-
mented harm to the families
directly receiving payday loans,
payday lending harms local com-
munity economies and the overall
economy.”
“Payday lending drains over
$2.5 million from the economy
each day”, continued the report.
more than 22,000 locations, there
are more than two payday stores
for every Starbucks coffee store.
CRL has also documented how
storefront payday lenders tend to
concentrate locations in low-
income and communities of color.
The Southern states of Alabama,
Louisiana, Mississippi, Tennessee,
and South Carolina had the high-
est number of payday stores per
10,000 residents. Outside of the
Deep South, Missouri and Nevada
were the only states with compara-
ble density of payday storefronts.
Similarly, the Insight Center
found that five states were charged
the greatest amount of payday loan
interest were California, Texas,
Florida, Mississippi and Illinois.
In these locales, financial payday
losses ranged from $135 million in
California to $55 million in Illi-
nois.
Remarking on the Insight Cen-
ter’s new findings, Keith Corbett,
CRL executive vice-president
said, “Payday lending is really
financial assault on communities
of color. By preying on consumers
with few resources, this predatory
product takes what little they have
and winds up leaving borrowers
worse off than before these
loans.”
Corbett’s comments are under-
scored by the Insight report. “Far
from creating opportunity, payday
lending creates impoverished
households and endangers local
economies.
Charlene Crowell is a communi-
cations manager with the Center
for Responsible Lending.
Will Supreme Court Kill Affirmative Action?
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A
decade after carefully rul-
ing in two University of
Michigan cases – striking
down the undergraduate admis-
sions procedures and upholding
those implemented by the law
school – the U.S. Supreme Court
seems on course to strike down
even the mildest form of affirma-
tive action admissions in higher
education.
After oral arguments in a case
brought by a White student who
was denied admission to the Uni-
versity of Texas at Austin, the jus-
tices are expected to hand down a
ruling in late June or early July.
Rather than await the outcome of
that case, last week the court
accepted another challenge to
affirmative action in Michigan,
which will not be argued until the
October term.
The fact that the court accepted
the Texas and Michigan cases,
after higher education officials
thought the matter was settled law,
is a clear indication that the con-
servative-leaning court plans to
eviscerate race- and gender-con-
scious college admissions pro-
grams,
no
matter
how
conservative or narrowly drawn. If
the court had other intentions, it
would have left lower court rul-
ings favorable to affirmative
action in the two cases stand.
Fisher v. University of Texas at
Austin, the case the court is
expected to rule on in late June,
was brought by Abigail Fisher, a
22-year-old White woman who
was rejected for admission in the
fall of 2008. Under the University
of Texas admissions program, the
top 10 percent of each high school
graduating class was guaranteed
admission to the state’s flagship
university. When Fisher applied,
90 percent of the students were
selected that way.
Page 4 The Portland Skanner April 3, 2013
T HE C URRY
R EPORT
George E.
Curry
The other 10 percent of appli-
cants were admitted based on a
variety of factors, including
extracurricular activities, awards
and honors, work experience,
socioeconomic status, standard-
ized test scores and race. Of all of
and appeals courts agreed, ruling
against Fisher. But the Supreme
Court decided to accept the case
anyway.
Even more surprising was the
court’s decision to accept another
Michigan case, Schulette v. Coali-
tion to Defend Affirmative Action,
while Fisher is still pending.
After the Supreme Court upheld
affirmative action in the Universi-
ty of Michigan law school case, 58
percent of voters adopted Proposal
2 in 2006, which prohibited dis-
crimination or preferential treat-
ment in public education,
government contracting and pub-
lic employment based on race, eth-
If the court had other intentions, it
would have left lower court rulings
favorable to affirmative action in the
two cases stand
those factors, Fisher decided to
challenge admissions because the
university considered race as one
of many factors.
“Race is only one modest factor
among many others weighed; it is
considered only in an individual-
ized and contextual way… and
admissions officers do not know
an applicant’s race when they
decide [who] to admit in UT’s
process,” the university argued in
its brief.
University of Texas officials said
if the modest affirmative action
program had not been in place,
Fisher still would not have quali-
fied for admission. The district
nicity or gender. It was modeled
after a ballot measure passed by
California voters in 1996.
Supporters of affirmative action
in Michigan, lodged a legal chal-
lenge to Proposal 2, paving the
path for the U.S. 6th Circuit Court
of Appeals in Cincinnati to rule 8-
7 that ballot initiative, which
amended the state constitution,
violated the federal Constitution’s
Equal Protection Clause.
According to the NAACP Legal
Defense and Educational Fund,
the percentage of Black students
enrolled at the University of
Michigan had dropped from 6.7
percent in 2006 to 4.5 percent in
2010 as a result of Proposal 2.
The permissible use of affirma-
tive action was thought to be
decided for good in 2003. In Gratz
v. Bollinger, the court ruled that
the University of Michigan’s
undergraduate admissions pro-
gram violated the Equal Protection
Clause of the 14th Amendment
when it assigned 20 points to
minority applicants.
But in Grutter v. Bollinger, the
court ruled that when narrowly tai-
lored, race can be lawfully used in
combination with other factors as
part of the University of Michigan
Law School admissions process.
In her written opinion, Justice
Sandra Day O’Connor cited bene-
fits of “obtaining the educational
benefits that flow from a diverse
student body.”
O’Connor, who has since retired
from the court, said she did not
envision affirmative action in
place forever. In fact, she suggest-
ed 25 years, without giving a rea-
son why it would not be needed
beyond that point.
Now, just 10 years later – and
despite this nation’s horrible histo-
ry on race – the conservative
majority on the court seem unwill-
ing to leave affirmative action in
place for another 15 years.
As Justice Stephen G. Breyer, a
supporter of affirmative action,
said last October: “Grutter said it
would be good law for at least 25
years, and I know that time flies,
but I think only nine of those years
have passed.”
George E. Curry, former editor-
in-chief of Emerge magazine, is
editor-in-chief of the National
Newspaper Publishers Associa-
tion News Service (NNPA.) He is a
keynote speaker, moderator, and
media coach.