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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.
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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