Letter to Comptroller Stringer Calling for Divestment from Illegal Payday Lenders

Letter to Comptroller Stringer Calling for Divestment from Illegal Payday Lenders

The Honorable Scott M. Stringer Comptroller, Nyc One Centre Street Ny, NY 10007

Dear Comptroller Stringer:

The undersigned businesses urge one to straight away and permanently divest ny City’s retirement funds from payday lending organizations – whose loans are categorically unlawful in nyc. City pension funds invested a lot more than $20 million in payday financing and high-cost installment financing organizations in 2016. Also, City pension funds spent almost $160 million in Lone celebrity Fund VIII, a personal equity investment that has DFC worldwide, Inc.,i which, in change, owns several payday loan providers, including cash Mart additionally the Check Cashing Store.

Spending general public retirement funds in disreputable payday financing businesses raises an immediate conflict for the City. Not just do these businesses make triple-digit interest loans which are unlawful in ny, but the majority of those have already been the main topic of enforcement actions for flagrant violations for the legislation; mistreated clients; and encountered allegations of misleading and defrauding investors – including pension that is public – in states where they’ve been allowed to work.

One of the investments : ● money America Overseas, Inc. and EZCORP, Inc. have now been the topics of major enforcement actions because of the customer Financial Protection Bureau (CFPB) for illegally court that is robo-signing, breaking the federal Military Lending Act,ii and unlawfully harassing borrowers at their houses and workplaces,iii among other violations. ● Cash America Overseas, Inc. additionally made loans with interest levels that surpassed 1,000per cent to Pennsylvania residents,iv in breach of Pennsylvania’s customer security guidelines. ● World Acceptance Corp. is under research because of the CFPBv since March 2014 to ascertain perhaps the company’s exploitative business practicesvi have been in breach for the customer Financial Protection Act, the reality in Lending Act, as well as other federal customer monetary rules. ● Enova Global, Inc., operator for the payday that is online CashNetUSA, ended up being discovered to possess gotten the absolute most consumer complaints among all payday lenders,vii in line with the CFPB’s customer grievance database. ● DFC Global, Inc. ended up being sued with a general general general general public retirement investment from the grounds so it “misrepresented to investors that [1] it complied with federal government laws and guidance pertaining to reckless financing methods, and [2] that the business made ‘prudent,’ ‘conservative,’ and ‘responsible’ underwriting decisions when coming up with loans.”viii

We think these assets pose reputational, appropriate, regulatory and financial dangers, and therefore you’ve got an ethical and fiduciary responsibility to divest.

Ny is among the 15 states, plus D.C., where strong state usury regulations and enforcement effortlessly ban payday lending. Brand brand brand brand brand brand New York’s usury rules are among the list of strongest into the country, capping rates of interest at 25% APR. Because of our ban, New Yorkers save about $790 million each year in feesix that payday loan providers and their ilk would otherwise siphon—an estimate that will not also add bank overdraft charges and other financial fallout from pay day loans.

In states in which the payday financing industry is allowed to work, individuals struggling to have from paycheck to paycheck are methodically targeted for high-cost loans they can not manage. Payday loan providers online payday loans direct lenders Kentucky charge exorbitant charges and interest that is shockingly high – typically between 300% and 400% APR. The lending that is payday model is based on loan-flipping, as borrowers typically must refinance or move over their loans – usually multiple times – ensnaring them in a long-lasting period of financial obligation. Studies have shown that communities of color are disproportionately targeted of these debt-trap loans.x

Inspite of the clear great things about banning payday loan providers as well as other fringe financial services organizations have actually for many years pressed legislation in Albany that will legalize high-cost predatory lending in nyc. Those efforts have now been beaten by way of advocacy that is tireless a statewide coalition of civil liberties, faith-based, work and community teams.

This season, lawmakers once once once once again reaffirmed brand brand brand brand New York’s longstanding dedication to maintaining payday advances away from our state by rejecting a few billsxi – supported by effective passions like brand brand brand New York’s check cashing industry and a California-based “fintech” corporation – that will have inflated brand brand New York’s usury rules and launched the floodgates to predatory financing.

Meanwhile, at the time of financial 12 months 2016, the five new york retirement funds committed to at the very least six associated with country’s largest payday and high-cost installment lenders – money America Global, Inc., Enova Global, Inc., EZCORP, Inc., First Cash Financial solutions, Inc., Regional Management Corp., and World Acceptance Corp. – and had been spent greatly in Lone celebrity Fund VIII, an exclusive equity investment that has a few notorious predatory financing organizations, like the payday financing giant, DFC worldwide.

These assets fly when confronted with brand brand brand brand New York’s groundbreaking and effective actions to help keep payday financing out of our state. New York’s enforcement agencies, as an example, have actually cracked straight straight straight straight straight down on unlawful lending that is payday issuing warnings to loan companies it was unlawful to gather on payday advances in Ny; directing payday lenders to avoid making unlawful pay day loans to Ny State residents; and contacting banking institutions and their re re re payments processors to end enabling payday loan providers to get into New Yorkers’ bank records. Ny in addition has acquired contract through the nationwide credit reporting agencies to stop reporting unlawful payday advances on New Yorkers’ credit file.

Nyc has made strides that are important financial equality and possibility recently. This past year, as an example, the worker-led “Fight for $15” motion won a landmark enhance to your state’s wage that is minimum. And even though we’ve a whole lot more work ahead, bankrolling a business that methodically exploits employees, retirees, as well as others struggling getting by and strips wide range from low-income communities and communities of color threatens not just to undercut those gains – it’s an affront to ny values.

A year ago, nj-new jersey, that also effortlessly bans lending that is payday offered its pension investment opportunities in a personal equity fund that held Ace Cash Express, another for the nation’s biggest payday lenders.xii Commenting in the state’s divestment with this payday home loan company, the president regarding the nj-new jersey State Investment Council claimed, “The bright line is what’s legal to accomplish and what’s perhaps perhaps maybe maybe maybe perhaps perhaps maybe not appropriate doing into the state of New Jersey.”xiii The New York City pension funds should follow this same bright line and fully and permanently divest from payday lending companies at a minimum.

Please contact Andy Morrison at brand brand brand brand New Economy venture with concerns: 212-680-5100 x210.

Brooklyn-Wide Interagency Council on Aging BWICA that is( academic Fund, Inc. Dēmos Fordham Law class Feerick Center for personal Justice trusted old fashioned Lower East Side (GOLES) Housing Court Answers, Inc. Housing and Family Services of better ny, Inc. Los Angeles Fuerza Unida, Inc. LatinoJustice PRLDEF Lower East Side People’s FCU Mobilization for Justice, Inc. (previously MFY Services that is legal Center for Law and Economic Justice New Economy venture New Yorkers for Responsible Lending ny Legal Assistance Group NY StateWide Senior Action Council, Inc. NYU Law Students for Economic Justice The performing World

Groups delivered a comparable page to NYS Comptroller Thomas P. DiNapoli regarding ny State retirement funds.

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