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About The skanner. (Portland, Or.) 1975-2014 | View Entire Issue (May 1, 2013)
ll s p - s y d s - e e d f Opinion New Efforts to Curb the ‘Debt Trap’ “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 The Skanner Newspaper, established in October 1975, is a weekly publica- tion, published each Wednesday by IMM Publications Inc., 415 N. Killingsworth St., T he small-dollar loans that generate long-lasting debt for consumers and cost them billions of dollars each year are drawing the active attention of legislators and regulators alike. On April 24, the Consumer Finan- cial Protection Bureau released a white paper on payday loans made by storefronts and by banks. Despite years of bank efforts to portray themselves as anything but payday lenders, the CFPB strips them of that cover. According to CFPB Director Richard Cordray, “What we found is there is not much difference from the consumer’s perspective, between payday loans and deposit advance loans. They have similar purposes and, as it turns out, simi- lar usage by consumers.” At the same time, three members of Congress – Congressional Black Caucus Members Elijah Cummings D-(MD) and John Conyers (D-Mich.) were joined by Oregon’s Rep. Suzanne Bonamici in urging federal regulators to take actions on bank payday loans. “We urge you to take meaningful joint regulatory action to ensure that no bank, regardless of its pru- dential regulator, traps borrowers in high-cost payday loans,” the members said in a statement. “Our constituents, and consumers everywhere, deserve better from our nation’s financial institutions.” The following day, two regula- tors, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation announced new regulatory actions to address potential consumer risks associated with the products R ESPONSIBLE L ENDING Charlene Crowell as well as the safety and soundness of operations. The two regulators’ actions are very similar, focusing on a borrower’s ability to repay while meeting ongoing expenses, safe and sound underwriting, and limiting the numbers of loans. According to Thomas J. Curry, FDIC insures deposits in more than 7,000 banks and savings associations. According to CFPB’s findings these actions could benefit about 12 million households that borrow payday loans each year, a potential reduction in the $7 billion in annu- al fees that are generated by more than 18,200 payday storefronts across the country. CFPB’s report examined 15 mil- lion payday loans made during a 12-month period, covering more than 90 percent of the market. Both storefront and bank versions exposed consumers to the risk of being caught in a revolving door These actions could benefit about 12 million households that borrow payday loans each year, a potential reduction in the $7 billion in annual fees OCC Comptroller, “We have sig- nificant concerns regarding the misuse of deposit advance prod- ucts.” OCC supervises all national banks and federal savings associa- tions with combined assets of $10.1 trillion, representing 71 per- cent of total U.S. commercial banking assets, according to its most recent annual report. Similarly, FDIC Chairman Mar- tin J. Gruenberg said, “The proposed supervisory guidance released today reflects the serious risks that certain deposit advance products may pose to financial institutions and their customers.” of debt. What was sold as a short- term bridge became an expensive, long-term loan. Risky loan struc- ture, loose lending standards, sustained usage and accompany- ing high costs were cited as characteristics of both products. According to the report, 75 per- cent of storefront payday lending revenue is derived from borrowers taking out 10 or more loans a year. For 68 percent of these borrowers, their annual income is $30,000 or less. Among the findings: -- Nearly one-in-four borrowers received government assistance or benefits such as Social Security, disability, unemployment or wel- fare benefits; -- The average borrower took 11 loans in the 12-month period, pay- ing $574 in fees for $392 in credit; and -- Despite lender attempts to reject the use of an annual percent- age rate (APR), a two-week loan with a $15 fee per $100 borrowed is actually a 391 percent APR. On banks’ deposit advance loans, CFPB also found that: -- Borrowers usually had much lower average balances than other bank customers, suggesting a smaller financial cushion to cover unexpected shortfalls; -- Nearly two-thirds of con- sumers also incurred additional fees such as overdraft or non-suffi- cient funds; -- The annual percentage rate of interest was 304 percent; and -- Most borrowers remained in debt for at least 149 days. Also this month, CRL and National People’s Action deliv- ered to regulators more than 150,000 petitions urging the offi- cials to crack down on high-cost payday lending. Also part of the petition drive were CREDO and Green America and Americans for Financial Reform. Commenting on CFPB’s find- ings, Uriah King, CRL’s vice-president of state policy, said, “This white paper affirms our long-standing critique of payday lending. The debt trap of payday loans is now official.” Charlene Crowell is a communi- cations manager with the Center for Responsible Lending. P.O. Box 5455, Portland, OR 97228. Telephone (503) 285-5555. E-mail: info@theskanner.com World Wide Web site: http://www.theskanner.com Fax: (503) 285-2900 The Skanner is a member of the National Newspaper Pub lishers Associ- ation and West Coast Black Pub lishers Association. All photos submitted become the property of The Skanner. We are not re - spon sible for lost or damaged photos either solicited or unsolicited. © 2013 The Skanner. ALL RIGHTS RE SERVED. REPRODUCTION IN WHOLE OR IN PART WITHOUT PERMISSION PROHIBITED. To see The Skanner News on your smart phone go to theskannermobile.com or scan this QR code with your app. • • • • • • • • Local news Opinions Jobs, Bids Sports Entertainment Music reviews Bulletin board RSS feeds Learning to Teach Students How to Learn African American students achieve at a different level than White students. Test scores are lower, as are high school and col- lege completion rates, and the number of African Americans attending four-year institutions is falling. The rate of African Amer- ican suspensions and expulsions from K-12 schools is higher than that of other groups. By almost any metric there are gaps between African American students and White or Asian students (Latinos achieve at about the same rate as African Americans). Why does this happen? The late sociologist John Ogbu hypothe- sized that the gap was the result of young African Americans thinking that learning was “acting White.” His theory was batted around as if it were fact, even after Duke econ- omist William Darity refuted the Ogbu theory. Why? Because it fits somebody’s stereotype to describe African American young- sters as culturally alienated from the mainstream, so much that they eschew the very institution that could be a bridge for them into the middle class. Given the history of African Americans and education, it is hard to swallow these stereotypes. Some states had laws on the books to prevent African Americans from learning to read and write in the pre-Civil War period. Both White and Black people risked flogging, fines and other penalties Page 4 The Portland Skanner May 1, 2013 B ENNETT C OLLEGE Julianne Malveaux for “teaching a slave to read.” Millions of African Americans sacrificed for the right to be liter- ate, and ensured that their children would also have opportunities by baking cakes, frying chicken, and earns $31,000 a year, compared to $51,000 for Whites. Fifty-one thousand dollars can buy a lot more opportunity than $31,000 can. If income determines hous- ing clusters, neighborhoods with a $51,000 mean income have better schools and more involved parents than the $31,000 neighborhood does. Closing income gaps closes opportunity gaps, according to a Ford Foundation-sponsored book written by Dr. Linda Darling- Hammond, an Obama education adviser. She says poverty and seg- regation means that some students Where does the achievement gap come from, then? It comes from the opportunity gap raising a few dollars to get to col- lege by whatever means necessary. At the beginning of the 20th century, the only colleges open to African Americans were historically Black colleges and universities, and we went despite the obstacles. Our presence reject- ed the notion that learning was “acting White.” In fact, we were acting learned and literate. Where does the achievement gap come from, then? It comes from the opportunity gap. The average African American household) attend schools that have fewer resources than others. Indeed, inner city high schools are less likely to offer Advanced Place- ment (AP) or International Baccalaureate (IB) classes. Some- times when these courses are available in suburban high schools, African American stu- dents are discouraged from taking them. Ivory Toldson, a professor at Howard University and a contrib- utor to the Root also refutes the notion that African American stu- dents think learning is “acting White.” Most African American students, he says, are interested in attending college but may not because of cost factors. He also says that academic support should be provided to all students, and that the way to close achievement gaps is to “reduce racial disparities in income and to increase equity and inclusion in education.” For a great deal of students the issue is not “acting White,” but being connected to educational options and outcomes. One of the more important factors in student achievement is parental involve- ment, yet many parents find themselves “too busy” or too unin- formed to interact with teachers. One study says that parents don’t necessarily have to help with homework, but simply to reinforce that homework should be done, and to be inquisitive about it. Unfortunately, many parents, frus- trated with the school system, write it off. Further, too many of our community organizations don’t sufficiently emphasize edu- cation, or if they do, don’t get into the “down and dirty” of it, prefer- ring to raise much-needed scholarship funds than to take a young person by the hand and guide them through next steps to education. Read the rest online at www.theskanner.com
