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Payday loansWell, that didn’t take long. Sensing with good reason that it’s now open season on struggling families at the North Carolina General Assembly, the predatory “payday lending” industry is already banging on the door on Jones Street seeking to have its parasitic industry (which was banned in the state in 2001) made legal once more in North Carolina. Senators Jerry Tillman and Clark Jenkins filed the bill yesterday and it will be formally introduced in the Senate today.

As we have reported repeatedly in this space over the years, “payday lending” is the pernicious practice of making short-term loans (typically of a week or two in length) to desperate people at effective annual interest rates of several hundred percent. Read More

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In case you missed it, the North Carolina Legislative Black Caucus sent a powerful letter to Regions Bank this week. Regions is the Alabama bank that’s trying to reintroduce the banned practice of high-cost, predatory payday lending in the state. The group joins Attorney General Roy Cooper and a large group of consumer protection groups calling on Regions to halt making the loans — which can have interest rates as high as 365% APR.

 

 

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Dozens of consumer advocates and concerned citizens staged a demonstration in front of Regions Bank in Raleigh Wednesday to send a strong anti-predatory lending message.

The NC General Assembly made payday lending illegal in 2001, and the Attorney General chased out the remaining payday lenders in 2006. But now, Regions is offering North Carolinians 365 annual percentage rate (APR) loans.

Activists say the out-of-state bank is exploiting a federal loophole that allows banks to ignore the state’s usury laws.

“Banks should not be allowed to undermine our state usury cap,” said Al Ripley, director of the Consumer Project at the NC Justice Center. “We’ve made a choice in North Carolina to stand up against abusive loans, and we need to affirm that choice now.”
“This product simply traps struggling families in debt,” said Chris Kukla of the Center for Responsible Lending. “Our research shows that the average bank payday loan borrower ends up taking 16 of these loans in a year, which translates into being in debt to the bank an average of 175 days per year.  Put another way, the average borrower who takes out a $300 loan will end up paying at least $480 in fees.”

To hear more from those protesting the predatory products, click below:

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Raleigh’s News & Observer gets it on the money this morning in an excellent editorial about Regions Bank’s attempt to reintroduce predatory payday lending in North Carolina.  

“We do not want North Carolina consumers subjected to payday loans,” [Attorney General Roy] Cooper said. “Payday loans are like a consumer needing a life preserver being thrown an anvil.” But it may be easier to complain about the bank than to do something about it.

Cooper defines what Regions is offering as a payday loan; the company characterizes it as money “intended to be used occasionally for emergencies.” For his part, Cooper wants to stop it, but the out-of-state charter held by Regions – and the fact that this is an online offering – complicate the attorney general’s position from a legal standpoint. Still, he should keep working on the issue with an aim to, borrowing from legendary lawman Barney Fife, “nip it … nip it in the bud.”

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As reported on the main NC Policy Watch site last week (It’s baaaack: Troubled Alabama bank tries to sneak payday lending back into North Carolina) at least one bank (Regions Bank out of Alabama) is trying to bring payday lending back into North Carolina after state lawmakers, regulators and advocates chased the practice away more than a decade ago.  

Mark Binker over at WRAL had more on the story over the holiday weekend, including the fact that a much larger and more respectable  institution, SunTrust Bank, may be considering doing its own shark impression as well. Let’s hope that SunTrust and others come to their senses and realize that payday lending is bad news for the state’s consumers and bank reputations.