Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

Payday lenders will end loans to military

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Latest Breaking News Donate to DU
 
question everything Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-20-07 03:21 AM
Original message
Payday lenders will end loans to military
Source: San Diego Union Tribune

Payday lenders will end loans to military

New federal law caps rates troops pay at 36 percent

By Michael Gardner
COPLEY NEWS SERVICE

March 19, 2007

SACRAMENTO Military personnel seeking quick cash may soon find one reliable source off limits. Large players in the payday loan industry are withdrawing from the military market nationwide, and many are planning to quit lending to soldiers and sailors in California starting Jan. 1, if not sooner. The moves are being driven by a new federal law that will impose a 36 percent cap on payday loans to troops effective Oct. 1. Payday lenders argue that processing applications would cost them far more than the less than $4 they would make from the average two-week, $255 loan at a 36 percent annualized rate.

(snip)

However, the industry cannot unilaterally pull out of California's military market under state anti-discrimination law. Assembly Democrats Lori Saldaa of San Diego and Ted Lieu of Torrance have introduced legislation, AB 7, to grant the industry a narrow exemption so they can refuse to lend to the military. The federal law will apply only to the military, which accounts for an estimated 2 percent of payday loan customers nationally.

But even supporters of the new federal law including military officials and some members of Congress acknowledge that it could create an unintended financial dilemma for some troops. Loan industry officials have warned that military personnel are likely to bounce more checks and be billed higher fees for going over credit card limits once payday loans dry up. The more desperate could resort to unregulated loans over the Internet and other unscrupulous sources, Gwaltney said.

Payday loans, also called cash advances or deferred deposits, generally provide cash-strapped borrowers with quick money. A pay stub and proof of a bank account are usually the only collateral required. In most cases, the loans are for a few hundred dollars until borrowers get their next paycheck usually in two weeks. For example, under existing rules, giving a $300 post-dated check to a lending company will return $255 in immediate cash. That $45 fee represents a 459 percent annual rate, according Paul Leonard, California director of the Center for Responsible Lending.

(snip)


Read more: http://www.signonsandiego.com/uniontrib/20070319/news_1...
Printer Friendly | Permalink |  | Top
truthisfreedom Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-20-07 03:36 AM
Response to Original message
1. 459% ??????
Unfriggingbelievable. Wholesale highway robbery!
Printer Friendly | Permalink |  | Top
 
sam sarrha Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-20-07 04:53 AM
Response to Reply #1
2. does the mafia loan shark even charge that much..?? this is CRIMINAL.!!!
Printer Friendly | Permalink |  | Top
 
Orangepeel Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-20-07 05:28 PM
Response to Reply #1
7. people think that it is 20%.
They borrow $100, they pay $120 back. But, of course, they pay that $20 back in two weeks and APR is calculated annually.

Printer Friendly | Permalink |  | Top
 
6000eliot Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-20-07 04:59 AM
Response to Original message
3. How about asking the question of why military people need these loans to begin with.
If they were being paid properly they wouldn't be running out of money. Defense contractors don't need payday loans, I bet.
Printer Friendly | Permalink |  | Top
 
acmavm Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-20-07 06:19 AM
Response to Reply #3
4. It'd not only the military who takes out these loans at these horrible
rates. It's everybody. The newly impoverished in this country are doing anything they can do to keep afloat.

Printer Friendly | Permalink |  | Top
 
SKKY Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-20-07 06:27 AM
Response to Original message
5. Coming from someone who knows these places well, this is very good news...
...I had a very bad experience with a place like this once, and the only thing that got me out from under them was a 2 month long assignment on a ship. In the space of 1 month, I had to get some work done on my car to the tune of about $2,000.00 dollars and was jut a bit short. So, I used one of these places to make up the difference. They were very friendly, and in no time, I had $900.00 dollars which got me through. The problem was that, 2 weeks later, these checks cleared, and it left me with almost nothing. So, what did I do? I took out another advance. That's the catch with these places. It turns into a cycle that is very hard to get out of.
Printer Friendly | Permalink |  | Top
 
Karenina Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-20-07 03:38 PM
Response to Reply #5
6. They're not the ONLY ONES ripping off Servicepeople.
Note the date...

Ordered Into Debt
Pentagon Brass Force Credit Debt On Soldiers and Sailors
Geoffrey Gray is a writer based in New York City. His work has been published in The New York Times, New York Magazine, and The Village Voice.

Editor's Note: This article originally appeared in The Village Voice, and is reprinted with permission. Published: Aug 21 2002

The numbers were staggering: $3,400 for a sumo-wrestling outfit, $16,000 for a corporate golf membership, $38,000 in cash advances for lap dances. All were part of a $101 million shopping spree made with "government purchase cards," the U.S. military's version of corporate credit cards -- another made-for-media scandal of reckless Defense Department spending.

But throughout congressional hearings on the topic in July, the real scandal with the military's other piece of plastic, the Government Travel Card (GTC), went ignored by the mainstream press, despite the fact that the card has plunged thousands of ordinary servicemen and servicewomen into debt so deep that the Pentagon is busy garnishing the wages of its own soldiers. And the only military commander known to raise hell about the scheme -- a lone Air Force colonel based in the Midwest -- says that blowing the whistle on the GTC ruined her career.
"The desperate rush to privatization has a million warts."

Lower in the ranks, the damage has been considerable. U.S. soldiers in Afghanistan have found themselves stranded in the desert without a dime because their credit was suddenly cut off, according to a May 29 report in the Military Times, leaving families behind in a nasty catch-22: Swallow the debt, or borrow more money to pay the bills so their credit wouldn't be ruined.

Concocted by Congress in 1998, the GTC was designed to privatize the accounting of federal travel expenses and touted to save taxpayer money. (It also reaps huge fees by the financial conglomerates that issue the cards.) It works like this: Servicepeople are ordered to apply for personal GTCs -- interest-free credit cards issued exclusively by the Bank of America. Instead of requesting vouchers or getting cash to pay for travel expenses, servicepeople pay up front with the their own GTC cards -- essentially floating interest-free loans to the government. As a result, they have to submit expense reports and wait for reimbursements.

But reimbursements often come late, according to a report issued in March of 2002 by the General Accounting Office, which means the GTC bills aren't always paid on time and servicepeople are getting branded as "delinquents." The GAO found "substantial" delays in reimbursements; in one command unit, for example, the California National Guard failed to pay its personnel within a month 61 percent of the time, and of those payments, 42 percent were inaccurate.

Just in the past year, the names of more than 10,000 military personnel have been reported to national credit bureaus as "credit risks," according to the Military Times. Instead of changing the mechanics of the travel card system, however, the DOD and the bank have only tightened their grip on cardholders; since October, the Pentagon has garnished over $19.5 million from military paychecks to pay off "delinquent" GTC bills, according to DOD accountants.

Sorry, I cached this before I had a clue about saving links...
Printer Friendly | Permalink |  | Top
 
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Sun Dec 21st 2014, 06:45 AM
Response to Original message
Advertisements [?]
 Top

Home » Discuss » Latest Breaking News Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators


Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC