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Fort BraggThere’s word from the General Assembly that the consumer finance industry is unhappy with state law designed to help protect active members of the military from exploitation. In case you’ve forgotten, the consumer finance industry runs more than 400 storefront shops throughout North Carolina that make loans featuring high interest rates and fees. The loans are often packed with junk insurance products and customers are also routinely “flipped” from one loan to another.

The provision at issue (G.S. 53-180.1) was enacted last year as part of legislation that gave the industry the authority to significantly raise the amounts it charges for loans. While failing to protect the rest of us from these predatory lending practices, the General Assembly was shamed into including some modest protections for military service members, whose paychecks are often targeted by the industry. The provision requires lenders to make sure that they do not extend loans to lower ranking enlisted personnel without at least notifying their commanding officers. It also prevents lenders from trying to collect on loans via phone or email from service members or their spouses while the service member is deployed to a dangerous area.

Now, less than a year after the protections were enacted, it appears that at least some lenders want the law (or its enforcement) weakened. For some time, it has been rumored that industry lobbyists have been working on such an effort and recently, insiders report, an industry representative confirmed the rumor.

In addition to raising the real prospect that junior service members could be exploited before heading off to Afghanistan or some other dangerous venue, such a potential change also raises important political issues in the Senate race between Senator Kay Hagan and House Speaker Thom Tillis. Read More

CasinosRaleigh’s News & Observer reports this morning that the Catawba Indian tribe has filed papers designed to jumpstart efforts to build a new gambling casino in Cleveland County.

As noted here previously, this would be an unmitigated disaster – especially for the thousands of people from whom casino corporations would extract millions upon millions of dollars. The mere fact that the casino would be gussied up via an affiliation with a Native American tribe is ultimately of no value in alleviateing this situtation.

The good folks at the national group Stop Predatory Gambling  put it this way is a special and informative web page devoted to the dangers of Native American casinos: Read More

At a time of historically low interest rates, state lawmakers gave final approval last night to legislation that ramps up the cost of consumer finance loans.

Meanwhile, consumer advocates are calling on Governor McCrory — who once made his oppostion to predatory “payday” loans a major plank in a mayoral reelection campaign in Charlotte  – to veto the legislation. This was released earlier today:

AARP Calls on Governor to Reject Rate Hike for Consumer Loans, Senate Bill 489 Senate Bill 489 will increase rates and fees on consumer finance loans 

RALEIGH –  On Monday night the Senate voted to concur with the House’s amendments to Senate Bill 489.  The bill now goes to the Governor’s office for his consideration.

“We are calling on the Governor to reject Senate Bill 489,” said AARP NC Director Doug Dickerson. “This legislation is going to hurt seniors and other consumers that use these loans by increasing interest rates and adding new fees.” Read More

3-4-13-NCPW-CARTOONTomorrow the North Carolina House Banking Committee will hear proposed legislation (already passed by the Senate) to jack up rates on already exorbitantly priced installment loans.

And in case you had any doubts as to what the proposal (and others like it) are at least partially about, check out this news story from earlier today over at Bloomberg News:

Payday Lenders Evading Rules Pivot to Installment Loans

For three years, payday lenders have been bracing for dedicated scrutiny from a U.S. agency for the first time. One way they’re getting ready: switching to loans designed to fall outside the regulator’s grasp.

Companies including Cash America International Inc. (CSH) and Advance America Cash Advance Centers Inc. (AEA) are increasingly selling longer-term installment loans to avoid rules the Consumer Financial Protection Bureau may impose on their shorter-term products.

Read the entire article by clicking here.

Loan sharksThere’s a common perception in the General Assembly these days that storefront consumer finance shops are not as bad a payday lenders. Indeed, this has been a common explanation offered by members of the Senate as they advanced legislation in recent weeks that will jack up the interest rates on consumer finance loans. 

If this is true, however, the difference between the two predators is just a matter of degrees, not basic characteristics. If payday lenders  are the great white shark of small loan predators, then finance companies are the tiger sharks. This truth is made clear in a new and powerful article from the muckrakers at the national news website, Pro Publica entitled “The 182 Percent Loan: How Installment Lenders Put Borrowers in a World of Hurt.” Read More