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4.26.12 99 Spring Clipbook

4.26.12 99 Spring Clipbook

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Published by: Minnesotans for a Fair Economy on Aug 01, 2012
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08/01/2012

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MediaCoverage
99%Spring
MinnesotansforaFairEconomy
www.mnfaireconomy.org
 
2
PaydayLendingReportRelease4/17/12
“Mostcustomerscan’taffordtorepaythewholeloaninjustafewweeks,andifthepaydaylenderdepositstheircheck,itwillbounce,costingthecustomerevenmoreinfees.Soinsteadofincurringbounced-checkfees,thecustomeragreestorenewtheloanandjustpaystheinterest,ortakesoutanewloanto payofftheoldone,leadingtoacycleofdebtthatcanlastformonthsoreven years.”
PredatoryPaydayLendinginMinnesota:HowU.S.BankandWellsFargoHurtConsumerswith‘CashFast’Loans’
NewYorkTimes|ChasingFees,BanksCourtLow-IncomeCustomersHuffingtonPost|WellsFargoExtendsLoanswithInterestRatesUpto274Percent StarTribune|ReportRipsBankson‘Payday’LoansMPR| AdvocatesSayUSBank,WellsFargoLoansPreyonLow-incomeBorrowersMinneapolisSt.PaulBusinessJournal|MNGroupClaimsBigBanksUsing‘Payday’LoansTwinCitiesBusiness|U.S.Bank,WellsFargoCriticizedforHigh-APRLoansMinnesotaDaily|U.S.Bancorp’sMoneyTalks
ChasingFees,BanksCourtLow-IncomeCustomers
JenniferSilver-GreenbergandBenProtess|NewYorkTimes|April25,2012
WhenDavidWegnerwentlookingforacheckingaccountinJanuary,hewaspepperedwithoffersforlow-endfinancialproducts,includingaprepaiddebitcardwithnumerousfees,ashort-termemergencyloanwithsteepcharges,moneywireservicesandcheck-cashingoptions.
“Imayaswellhavegonetoapaydaylender,”saidMr.Wegner,a36-year-oldnursingassistantinMinneapolis,whoendedupchoosingalocalbranchofU.S.Bankandavoidedthepaydaylenders,pawnshopsandcheckcasherslininghisneighborhood.Alongwithacheckingaccount,heselecteda$1,000short-termloantohelppayforhiscysticfibrosis
 
3medications.Theloancosthim$100infees,andthatwillescalateifitgoesunpaid.Anincreasingnumberofthenation’slargebanks—U.S.Bank,RegionsFinancialandWellsFargoamongthem—areaggressivelycourtinglow-incomecustomerslikeMr.Wegnerwithalternativeproductsthatcancarryhighfees.Theyarerapidlyexpandingtheseofferingspartlybecausetheproductswerelargelyuntouchedbyrecentfinancialregulations,andalsotorecoupthebillionsinlostincomefromrecentlimitsondebitandcreditcardfees.Bankssaythattheyareofferingavaluableserviceforcustomerswhomightnototherwisehaveaccesstotraditionalbankingandthattheycanoffertheseproductsatcompetitiveprices.TheConsumerFinancialProtectionBureau,anewfederalagency,saiditwasexaminingwhetherbanksranafoulofconsumerprotectionlawsinthemarketingoftheseproducts.Inthepushforthesecustomers,banksoftenhaveanadvantageoverpaydayloancompaniesandotherstorefrontlendersbecause,eventhoughbanksareregulated,theytypicallyarenotsubjecttointerestratelimitsonpaydayloansandotheralternativeproducts.Somefederalregulatorsandconsumeradvocatesareconcernedthatbanksmayalsobesteeringpeopleatthelowestendoftheeconomicladderintorelativelyexpensiveproductswhenlower-costoptionsexistatthebanksorelsewhere.“Itisadisquietingdevelopmentforpoorcustomers,”saidMarkT.Williams,aformerFederalReserveBankexaminer.“Theyaregettingpushedintohigh-feeoptions.”“Welookatalternativefinancialproductsofferedbybothbanksandnonbanksthroughthesamelens—whatistheriskposedtoconsumers?”saidRichardCordray,directorofthebureau.“Practicesthatmakeithardforconsumerstoanticipateandavoidcostlyfeeswouldbecauseforconcern.”Analystsinthebankingindustrysaythatlendingtolow-incomecustomers,especiallythosewithtarnishedcredit,istrickyandthatbankssometimeshavetochargehigherratestooffsettheirrisk.Still,inanAprilsurveyofprepaidcards,ConsumersUnionfoundthatsomebanks’prepaidcardscomewithlowerfeesthannonbankcompetitors.Whilebankshaveofferedshort-termloansandsomecheck-cashingservicesinthepast,theyareintroducingnewproductsandexpandingsomeexistingones.Lastmonth,WellsFargointroducedareloadableprepaidcard,whileRegionsFinancialinBirmingham,Ala.,unveiledits“NowBanking”suiteofproductsthatincludesbillpay,checkcashing,moneytransfersandaprepaidcard.TheRegionspackageismeanttoattractthe“growingpay-as-you-goconsumer,”saidJohnOwen,thebank’sseniorexecutivevicepresidentforconsumerservices.Thepackagesarethelatesttwiston“cross-selling,”inwhichlenderscompetetowinalargershareofcustomerbusinesswithdealsonchecking,savingsaccountsandmortgages.Reachingtheso-calledunbankedorunderbankedpopulation—peoplewhousefew,ifany,bankservices—couldbelucrative,industryconsultantssaid.KimberlyGartner,vicepresidentforadvisoryservicesat

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