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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

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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

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Loan sharks…that high-interest loan companies in North Carolina “haven’t had a rate increase in 30 years”  tell him/her that this statement is, in a word, baloney (and feel free to use a stronger word).

#1: Inflation for lenders is accounted for through the issuance of larger and larger loans, not higher and higher interest rates. As with home and car loans, the average finance company loan in North Carolina 30 years ago was much smaller than it is today. It is simply absurd to even imply Read More

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Predatory loansMembers of the Senate Commerce Committee approved a bill today that would jack up interest rates on small loans made in North Carolina to unprecedented levels. The bottom line on the bill: Already high-cost loans will become bigger, more expensive and harder to pay off. 

The action came on a voice vote after several experts explained why the bill would be a disaster for already struggling consumers.

I know: No big surprise for the 2013 North Carolina General Assembly — a group whose motto ought to be “When corporate lobbyists say ‘jump,’ we say ‘how high?'”

Still, this morning’s hearing featured a moment of such blatant and downright stunning hypocrisy, it had to be witnessed to be believed.

Consider the following: Read More

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The watchdogs at Democracy NC released the following sad but not surprising report earlier this morning:

For Release Tuesday, February 28, 2012 — Contact: Bob Hall, 919-489-1931

Amended Report from Speaker Thom Tillis Reveals Large Donations from Industry He Helped

A revised campaign disclosure report filed by House Speaker Thom Tillis earlier this month reveals that he received more than $20,000 last October from a special-interest group whose priority legislation he pushed through the House despite stiff opposition from consumer advocates and the United States military. Read More