Opinion
Banks Pull Exploitive Payday Loans
“Challenging People to Shape
a Better Future Now”
B ERNIE F OSTER
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The Skanner Newspaper, established
in October 1975, is a weekly publica-
tion, published each Wednesday by
IMM Publications Inc.,
415 N. Killingsworth St.,
P.O. Box 5455, Portland, OR 97228.
M
ore good news keeps
coming for consumers in
early 2014. On the heels
of new mortgage rules that took
effect January 10, the following
week four banks making payday
loans pulled their products from
the market. Announcing a halt to
their triple-digit interest rates were
Wells Fargo, Regions, Fifth Third
and US Bank. Together, these
lenders have combined assets of
$2.1 trillion, serving customers
through 30,000 branches and more
than 21,500 ATMs across the
country.
Sometimes known as advance
deposit loans, or trademarked
names such as US Bank’s Check-
ing Account Advance or Wells
Fargo’s Direct Deposit Advance,
the loans operate in the same man-
ner as payday loans hawked by
stores. Customers borrow a few
hundred dollars and then the bank
repays itself from the borrower’s
next direct deposit, assessing a fee
plus the entire loan amount.
Research by the Center for
Responsible Lending (CRL) has
found that the typical bank payday
borrower:
• Is charged a fee of $10 per
$100 borrowed, amounting to an
annual percentage rate (APR) of
300 percent;
• Has a one in four chance of
also being a Social Security recip-
ient;
• Is twice more likely to incur
overdraft fees than bank cus-
tomers as a whole and
• Often remains in debt for six
months of a year.
Consumer advocates and civil
rights leaders have been shining a
bright light on banks that chose to
R ESPONSIBLE
L ENDING
Charlene
Crowell
engage in this kind of lending over
the past two years. Below are a
few examples of that consumer
activism.
In early 2012, 250 organizations
and individuals sent a letter to fed-
eral banking regulators expressing
concerns. A year later in 2013,
more than 1,000 consumers and
sachusetts in May 2013 sent a joint
letter to the Office of the Comp-
troller of the Currency (OCC).
“As Chairman and member of
the Senate Special Committee on
Aging, we take very seriously our
responsibilities to seniors and eld-
erly consumers who expect and
deserve fair and transparent finan-
cial services,” said the Senators.
“Social Security was created to
provide seniors with financial sup-
port to help them cover basic liv-
ing expenses not for banks seeking
new sources of revenue by exploit-
ing retirees with limited means.
Therefore it is critical that banks
be discouraged from using gov-
ernment benefits as proof of
Announcing a halt to their triple-digit
interest rates were Wells Fargo,
Regions, Fifth Third and US Bank
organizations told the Consumer
Financial Protection Bureau about
elder financial abuse, including
bank payday lending. CRL in
coordination with CREDO, an
organization that funds progres-
sive nonprofits, delivered a peti-
tion with 150,000 signatures in an
appeal to federal regulators.
By April 2013, the Federal
Deposit Insurance Corporation
and the Office of the Comptroller
of the Currency proposed regula-
tory guidance on bank payday loan
criteria. Weeks later amid still-
growing consumer concerns,
Florida’s U.S. Senator Bill Nelson
and Sen. Elizabeth Warren of Mas-
income, and we would hope such a
provision would be included in the
final guidance.”
By November 2013, FDIC and
OCC finalized regulations and
advised banks that a borrower’s
ability to repay a loan must be
considered when issuing these
loans.
In December 2013, the Leader-
ship Conference on Civil and
Human Rights (LCCR), represent-
ing more than 200 diverse nation-
al organizations, unanimously
adopted a resolution urging states,
Congress and federal agencies to
increase regulatory oversight and
enforcement of all payday lenders.
“Low-income people and people
of color have long been targeted
by slick advertising and aggres-
sive marketing campaigns to trap
consumers into outrageously high
interest loans,” said Wade Hender-
son, LCCR president and CEO.
“We’re simply advocating for rea-
sonable regulatory oversight that
ensures that low-income people
won’t be swindled out of the little
money they do have at their dis-
posal.”
Reactions to the bank decisions
resulted in cheers from consumer
advocates. For example, Dory
Rand, president of the Chicago-
based Woodstock Institute, said,
“We applaud these decisions to
stop offering these dangerous
products. For too long, these prod-
ucts – like storefront payday loan
products – have wreaked havoc on
borrowers’ finances and trapped
them in a cycle of debt.”
In short, it was the constant call
for consumer protections that ulti-
mately led to banks foregoing pay-
day loans. By combining efforts
on a single issue, advocates
accomplished together what none
might have done alone.
I am hoping the rest of 2014 will
be energized by the success of
these early 2014 consumer victo-
ries. Perhaps federal regulators
will soon put an end to all con-
sumer debt traps. As we celebrate
this key consumer victory, let us
strive towards more financial
reforms.
Charlene Crowell is a communi-
cations manager with the Center
for Responsible Lending. She can
be reached at Charlene.crow-
ell@responsiblelending.org.
Telephone (503) 285-5555.
E-mail: info@theskanner.com
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Reforming Outdated School Discipline
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“A
routine school disci-
plinary
infraction
should land a student
in the principal’s office, not in a
police precinct.”—Eric Holder,
United States Attorney General
On January 8, U.S. Attorney
General Eric Holder and Educa-
tion Secretary, Arne Duncan came
to Baltimore’s historic Frederick
Douglass High School to
announce a comprehensive set of
guidelines to tackle the problem of
“zero tolerance” disciplinary poli-
cies in our schools. As the Nation-
al Urban League and others have
been pointing out for years, stu-
dents of color and students with
disabilities receive disproportion-
ately more and markedly harsher
punishments for the same misbe-
haviors as other students. This
obviously discriminatory treat-
ment is not only denying an edu-
cation to thousands of minority
students, it is funneling too many
of them into the criminal justice
system and feeding the school-to-
prison pipeline.
According to data collected by
the Department of Education’s
Office for Civil Rights, African
American students without dis-
abilities are more than three times
as likely as their White peers with-
out disabilities to be expelled or
suspended. The New York Times,
in its Sunday editorial, called the
treatment of disabled students “a
Page 4 The Portland Skanner January 29, 2014
T O B E
E QUAL
Marc Morial
national disgrace.” The Times
cites a finding by the Center for
Civil Rights Remedies at the Uni-
versity of California that “in ten
states, including California, Con-
necticut, Delaware and Illinois,
more than a quarter of black stu-
League’s State of Black America,
Children’s Defense Fund Presi-
dent Marian Wright Edelman
wrote, “The growth in school
expulsions and suspensions con-
tributes to increasing numbers of
children and teens entering the
prison pipeline.
Discouraged
teens who are suspended or
expelled are more likely than their
peers to drop out of school alto-
gether.”
To respond to this challenge, the
Obama administration guidelines
direct educators to take three
deliberate actions. First, do more
to create the positive school cli-
“A routine school disciplinary infraction
should land a student in the principal’s
office, not in a police precinct.”
— Eric Holder, United States Attorney General
dents with disabilities were sus-
pended in the 2009-10 school
year.”
The National Urban League has
long stood with parents and others
who have challenged so-called
“zero-tolerance” policies that have
unfairly targeted students of color
and done more harm than good in
many public schools. In fact, in a
2007 essay in the National Urban
mates that can help prevent and
change inappropriate behaviors.
Second, ensure that clear, concise
and consistent expectations are in
place to prevent and address mis-
behavior. And third, schools must
understand their civil rights obli-
gations and strive to ensure fair-
ness and equity for all students.
The administration is distributing
a resource package to schools and
targeting grant money to train
teachers and staff in ways to
improve student behavior and
school climate.
We applaud this action and
believe the elimination of racially
skewed zero tolerance policies
must be an indispensable part of
any future discussion of education
reform. A growing number of
school districts and schools,
including Baltimore’s Frederick
Douglass High, have already
begun to reform their approach to
discipline and are seeing positive
results. Suspensions have dropped
46 percent at Frederick Douglass
since 2007. More schools should
follow their lead. As Attorney
General Holder said, “Too often,
so-called zero-tolerance policies –
however well-intentioned…dis-
rupt the learning process and can
have significant and lasting nega-
tive effects on the long-term well-
being of our young people –
increasing their likelihood of
future contact with juvenile and
criminal justice systems.” We
cannot afford to keep putting our
kids at risk or wasting their poten-
tial and jeopardizing the future of
our nation with this misguided
policy.
Marc H. Morial, former mayor
of New Orleans, is president and
CEO of the National Urban
League.