The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Talk Of Payday Lending Legislation Heating Up

On July 26th, 2010, posted in: Uncategorized by

Do you know what’s hot – besides you, me and everyone else who hasn’t had the good sense to move to colder climates?  Payday Lending – and its less than considerate stance for folks who struggle.  The discussion and the prospects of legislating Payday Lending is heating up like a July afternoon.  Let’s just say that these purveyors of expensive APRs are back on the front burner.

As we turn our sights to Jefferson City and what might be on this upcoming year’s legislative agenda, it would appear as though dealing with Missouri’s abundance of Payday Lenders will be the hot topic.  There is no question that this go-round of Payday Lending discussion promises to be much like summer in St. Louis – it’s going to make a lot of people hot under the collar.

Recent public forums have brought out more than a few folks objecting to the Payday Lenders and how they do their business.  At a most recent gathering, an attorney pontificated about the industry’s less than scrupulous means of collections.  The self-described “attorney for the poor” was dogged and passionate in his description of the questionable practices of payday lenders.  If the industry’s collection practices are as painful as this guy’s droning on, then surely there is a problem.  He made his point and then exhausted us with it.  That’s what attorneys do – they get paid by the word.

AARP had a few things to say as well.  They’re hot under the collar.  The lady who testified didn’t mention the collection efforts (she didn’t have to), but everything else that is wrong with payday loans was on her list.  The short repayment period (two weeks) was mentioned.  She’s right.  If you don’t have it now, you won’t have it two weeks from now either – especially those on a fixed income.

The World War II Generation is getting lit up by these guys.  She shared stories of poor people finding themselves slipping further into poverty because of the industry’s practices.  All in all, if half of what she said is true, there are twice as many horror stories than were originally thought.  Let’s just say, there are many in the senior set stuck in a cycle of destruction.  It’s sad; very sad.

A pastor representing many in the North St. Louis community weighed in with much of the same – something has to be done to squash these guys from their continued assault on those of a lesser means.  Because of the need to get to a Wednesday night Bible class, his comments were succinct and focused on the need to cap the interest rate.  His congregation’s major concern is “the high cost of credit.”  The equivalent APR (annual percentage rate) is somewhere north of 400%.  As a sidebar, now you know why the Payday Lending industry considers Missouri a popular destination to sell their wares.  All in all, the Pastor’s congregation is right – something must be done about the rate.

In principle, SLCCU is in agreement with the attorney, AARP and the pastor.  Something needs to be done, but what?   We don’t know what the legislation will look like, but we’re a big fan of taking whatever steps are necessary to assist in breaking the payday loan cycle that is taking its toll on our community.  Neighborhoods that can least afford to be stripped of what little economy they have are being targeted and, in many instances, being fleeced of any chance of prosperity.  This is best described as the antithesis of economic empowerment.

SLCCU’s Freedom Loan is aptly named.  It is our payday loan alternative that comes with a fair interest rate, a longer repayment term, direct deposit for payment, and a savings requirement (10% of the amount borrowed) that helps to get borrowers off the cycle of borrowing.  We add financial education as a means to be different.  Our goal is to provide tools in which to learn how to avoid such a product; tools like budgeting, financial management, sound credit management, etc.  The Credit Union works to give back to the community, not take away from it.  It’s what we do.  Check us out for what helps people, not hurts people.

A final thought.  The pastor impressed me.  While he was testifying, all I could think of were two passages from the Bible.  One deals with God’s pleasure in his people’s prosperity, and the other is a reminder that God’s people perish for a lack of knowledge.  Both seem to be appropriate thoughts to help “center” the energy of Missouri’s legislators in their attempt to gain greater control of Payday Lenders.

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