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No on SB 5899: Payday loans don't solve crisis, they create one …

EDITORIAL


(March 13, 2015) – Remember two years ago, when the Republican-controlled Washington State Senate brought our state to the brink of a government shutdown?

The Senate had a list of ideological policy bills upon which they demanded House action before they would agree to an operating budget. After two overtime sessions, cooler heads finally prevailed and Gov. Jay Inslee signed a deal just hours before the budget cycle ended on July 1, prompting The (Everett) Herald to editorialize, “Ideology and partisanship, especially in the Senate, supplanted pragmatism.”

Good times… good times.

One of those 2013 ideological policy bills is back in 2015, and the more solidly Republican-controlled Senate just sent it to the House. It’s SB 5899, which would relax consumer protections against short-term high-interest payday loans that push low-income working families deeper and deeper into debt. The bill would replace the state’s limited payday loans with “installment loans” that would allow up to a year’s worth of interest and fees.

Washington’s current law limits payday loans to $700 per loan and no more than eight loans per year. Borrowers are charged a $95 fee and typically must pay it off in two weeks. Under SB 5899, a $700 loan would cost borrowers up to a total of $1,195 in principal, interest and fees if paid off in six months, and up to a total of $1,579 if it took a full year.

Organized labor and other advocates for low-income working families have joined anti-poverty and consumer groups in opposing SB 5899. Why? Because payday loans don’t solve a financial crisis, they create one. Borrowers often must take a second loan to pay off the first, and so on, leading to a spiral of debt that sucks them dry.

It also harms the economy.

A 2013 study by the Insight Center for Community Economic Development found that the national burden of repaying payday loans in 2011 led to $774 million in lost consumer spending, the loss of more than 14,000 jobs, and an increase in Chapter 13 bankruptcies. The study found that each dollar of interest paid to payday lenders subtracted $1.94 from the economy due to reduced household spending, while only adding $1.70 to payday lending establishments. It’s an anti-multiplier effect. For every dollar of interest paid in payday loan interest, the economy lost a quarter.

Remember last fall’s election, when voters were demanding greater access to short-term high-interest loans? Neither do we.

The 2015 legislative session was supposed to focus on last fall’s big campaign issues: funding basic education and transportation, addressing income inequality, and making sure our tax dollars (and tax incentives) are efficiently spent. How did promoting payday lending get in there again?

It began last fall, all right. But it didn’t come from the public, it came from Seattle-based payday lender MoneyTree.

Jim Brunner of The Seattle Times wrote an explosive story last week outing Moneytree as leading the full-court lobbying press to relax payday lending laws. He reports that the effort began last fall when the company and its executives, who traditionally direct their political contributions to Republicans, “sought to strengthen ties with Democrats, boosting donations to Democratic legislator campaigns in last fall’s elections, and quietly employing a well-connected Seattle public-affairs firm that includes the political fundraiser for Gov. Jay Inslee and other top Democrats.”

On Tuesday, a heroic effort was made by most of the Senate’s Democratic minority caucus to stop SB 5899 or amend it to lower the interest and fees payday lenders can charge. But those efforts were thwarted, and after a passionate debate that lasted more than two hours, the bill passed the Senate, 30-18, with Democratic Sens. Brian Hatfield, Steve Hobbs, Karen Keiser, Marko Liias, and Kevin Ranker joining all Republicans (except Sen. Kirk Pearson) in voting “yes.”

Now it heads over to the House, where its companion bill died without a floor vote after Wednesday’s cutoff deadline. The question is, given Moneytree’s… outreach… to Democrats, will it again die in their House? Will it again become embroiled in end-game budget negotiations to try to force its passage?

We hope not.

We agree with state Attorney General Bob Ferguson, who sent a letter to legislators opposing the bill, saying our state’s payday-lending system includes important safeguards for consumers “and does not need to be overhauled.”

We also agree with The (Tacoma) News Tribune, which wrote that payday lenders’ efforts to pass SB 5899 “have nothing to do with helping poor people and everything to do with their bottom line. Lawmakers should see this legislation for what it is and reject it. If it passes, Gov. Jay Inslee should veto it.”


The Stand is the news service of the Washington State Labor Council, AFL-CIO.

[…]

Missouri AG Koster shuts down predatory payday loans | SEMO TIMES

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Attorney General Chris Koster announced yesterday that he has obtained an agreement with eight online payday loan operations to shut down payday loan operations in Missouri, provide $270,000 in consumer restitution, and erase all loan balances for Missouri consumers.

Koster said Martin A. “Butch” Webb acted through numerous business entities operating from a Native American reservation in South Dakota, including Payday Financial, Western Sky Financial, Lakota Cash, Great Sky Finance, Red Stone Financial, Big Sky Cash, Lakota Cash, and Financial Solutions, none of which were licensed to do business in Missouri. These businesses sold short-term loans with exorbitant fees and forced consumers to agree to have their future wages garnished without going through the court system as required by Missouri law.

The Attorney General’s Office received 57 complaints from consumers who were collectively charged approximately $25,000 in excess fees. The Attorney General’s investigation subsequently discovered as many as 6,300 other Missourians who may have also been charged excessive fees. One Missouri consumer was charged a $500 origination fee on a $1,000 loan, which was immediately rolled into the principal of the loan. She was charged 194 percent APR and eventually paid more than $4,000.

“These predatory lending businesses operated in the shadows, taking advantage of Missourians through outrageous fees and unlawful garnishments,” said Koster. “Webb may have thought that by operating on tribal land he could avoid compliance with our state’s laws. He was wrong.”

Under Missouri law, a payday lender cannot charge “origination” or other such fees in excess of 10 percent of the loan, up to a maximum of $75.

The judgment obtained by Koster permanently prohibits Webb or any of his businesses from making or collecting on any loans in Missouri, and it cancels existing loan balances for his Missouri customers. Webb must also instruct credit reporting agencies to remove all information previously supplied to them about specific consumers. In addition, Webb must pay $270,000 in restitution to consumers and $30,000 in penalties to the state.

Consumers who, while living in Missouri, paid excess origination fees to one of the companies listed above—even if the loan was later sold to a third party—may be eligible to receive restitution under the terms of the judgment. The Attorney General’s office will be contacting eligible consumers.

“My hope is that every Missouri consumer who took out a short-term loan with these companies gets back what they were charged in excess of Missouri law,” said Koster. “The message to online payday lenders is clear: follow Missouri law or you won’t be doing business in our state.”

[…]

These loan officers took kickbacks

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NEW YORK (CNNMoney)

Federal and state authorities have ordered Wells Fargo and JPMorgan Chase to pay a combined $35.7 million for taking part in a mortgage kickback scheme.

The Consumer Financial Protection Bureau and the Maryland Attorney General said Thursday that loan officers at both banks took cash payments from a now-defunct title company in exchange for business referrals.

Regulators said more than 100 loan officers at Wells Fargo (WFC) locations in Maryland and Virginia steered thousands of loans to Genuine Title, which went out of business last year, in exchange for cash.

Related: Bank’s ‘repeated failures’ led to 2,000 foreclosures, feds say

Todd Cohen, a former Wells Fargo banker, allegedly had Genuine Title make “substantial cash payments” to his girlfriend at the time in order to avoid detection. The bureau has ordered Cohen and his now-wife, Elaine Cohen, to pay a $30,000 penalty.

Regulators said Wells Fargo failed to halt the scheme even though it was facing a federal lawsuit over the illegal activity.

“We have fully cooperated with the CFPB in this matter and have taken strong corrective action, including terminating team members,” Wells Fargo said in a statement.

The wrongdoing was less extensive at JPMorgan Chase (JPM). The bureau said at least six loan officers at Chase locations in Maryland, Virginia and New York helped steer 200 loans to Genuine Title. The bank has agreed to pay a total of $900,000 in penalties and compensation.

Related: U.S. Bank refunding $48 million to customers

“We are fully committed to ensuring that our mortgage bankers comply with all legal and regulatory requirements,” Chase said in a statement. “These former employees clearly violated our policies, procedures and training.”

The CFPB said a third bank also took kickbacks from Genuine Title. But the bureau said it did not bring an enforcement action against that bank because it “self-identified” and took steps to correct the illegal action.

“These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” said CFPB Director Richard Cordray.

First Published: January 22, 2015: 4:37 PM ET

[…]

Beware of phony loan offers

Ohio Attorney General Mike DeWine is warning Ohioans seeking extra cash following the holiday season should beware of phony loan offers.

In 2014, the Ohio Attorney General’s Office received more than 200 complaints about advance-fee loans or credit cards, including many potential scams. The average reported loss was approximately $500.

“In a typical loan scam, you find a loan for $1,000 to $5,000 but the lender says you have to pay hundreds of dollars upfront to prove that you’re trustworthy,” DeWine said. “You send your own money but you don’t receive anything in return. If you have to send money in order to get money, it’s likely a scam.”

Several Ohio consumers reported losing more than $2,000 each after trying to obtain a loan online. The consumers were told they were approved for loans but first had to pay advance fees using prepaid cards or money transfers. Although the consumers provided the payments, they never received the loans.

Scam lenders use various phony reasons to explain why consumers must make upfront payments, such as:

• To prove the consumers can make the monthly payments;
• For processing fees, taxes, or insurance;
• To compensate for a low credit score;
• For closing costs or bank fees; or
• To secure the loan.

The initial fee in a loan scam is not the same as a down payment or other cost associated with a legitimate loan. Scam lenders do not check consumers’ credit history; they just promise a loan in exchange for advance payment.

To protect themselves from scams, consumers should check for complaints with the Ohio Attorney General’s Office and Better Business Bureau. They also should be skeptical of lenders that ask for payment via money transfer or prepaid money card. These are preferred payment methods for scam artists, because once the money is sent, it is difficult to trace or to recover.

Consumers who believe they have been treated unfairly or who need help detecting a scam should contact the Ohio Attorney General’s Office at www.OhioAttorneyGeneral.gov or 800-282-0515.

[…]

Texas Is Throwing People In Jail For Failing To Pay Back Predatory …

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At least six people have been jailed in Texas over the past two years for owing money on payday loans, according to a damning new analysis of public court records.

The economic advocacy group Texas Appleseed found that more than 1,500 debtors have been hit with criminal charges in the state — even though Texas enacted a law in 2012 explicitly prohibiting lenders from using criminal charges to collect debts.

According to Appleseed’s review, 1,576 criminal complaints were issued against debtors in eight Texas counties between 2012 and 2014. These complaints were often filed by courts with minimal review and based solely on the payday lender’s word and frequently flimsy evidence. As a result, borrowers have been forced to repay at least $166,000, the group found.

Appleseed included this analysis in a Dec. 17 letter sent to the Consumer Financial Protection Bureau, the Texas attorney general’s office and several other government entities.

It wasn’t supposed to be this way. Using criminal courts as debt collection agencies is against federal law, the Texas constitution and the state’s penal code. To clarify the state law, in 2012 the Texas legislature passed legislation that explicitly describes the circumstances under which lenders are prohibited from pursuing criminal charges against borrowers.

It’s quite simple: In Texas, failure to repay a loan is a civil, not a criminal, matter. Payday lenders cannot pursue criminal charges against borrowers unless fraud or another crime is clearly established.

In 2013, a devastating Texas Observer investigation documented widespread use of criminal charges against borrowers before the clarification to state law was passed.

Nevertheless, Texas Appleseed’s new analysis shows that payday lenders continue to routinely press dubious criminal charges against borrowers.

Ms. Jones, a 71-year-old who asked that her first name not be published in order to protect her privacy, was one of those 1,576 cases. (The Huffington Post reviewed and confirmed the court records associated with her case.) On March 3, 2012, Jones borrowed $250 from an Austin franchise of Cash Plus, a payday lender, after losing her job as a receptionist.

Four months later, she owed almost $1,000 and faced the possibility of jail time if she didn’t pay up.

The issue for Ms. Jones — and most other payday borrowers who face criminal charges — came down to a check. It’s standard practice at payday lenders for borrowers to leave either a check or a bank account number to obtain a loan. These checks and debit authorizations are the backbone of the payday lending system. They’re also the backbone of most criminal charges against payday borrowers.

Ms. Jones initially obtained her loan by writing Cash Plus a check for $271.91 — the full amount of the loan plus interest and fees — with the understanding that the check was not to be cashed unless she failed to make her payments. The next month, when the loan came due, Jones didn’t have the money to pay in full. She made a partial payment, rolling over the loan for another month and asking if she could create a payment plan to pay back the remainder. But Jones told HuffPost that CashPlus rejected her request and instead deposited her initial check.

Jones’ check to Cash Plus was returned with a notice that her bank account had been closed. She was then criminally charged with bad check writing. Thanks to county fines, Jones now owed $918.91 — just four months after she had borrowed $250.

In Texas, bad check writing and “theft by check” are Class B misdemeanors, punishable by up to 180 days in jail as well as potential fines and additional consequences. In the typical “hot check” case, a person writes a check that they know will bounce in order to buy something.

But Texas law is clear that checks written to secure a payday loan, like Jones’, are not “hot checks.” If the lender cashes the check when the loan is due and it bounces, the assumption isn’t that the borrower stole money by writing a hot check –- it’s just that they can’t repay their loan.

That doesn’t mean that loan transactions are exempt from Texas criminal law. However, the intent of the 2012 clarification to state law is that a bounced check written to a payday lender alone cannot justify criminal charges.

Yet in Texas, criminal charges are frequently substantiated by little more than the lender’s word and evidence that is often inadequate. For instance, the criminal complaint against Jones simply includes a photocopy of her bounced check.

Making matters worse, Texas Justice of the Peace courts, which handle claims under $10,000, appear to be rubber-stamping bad check affidavits as they receive them and indiscriminately filing criminal charges. Once the charges are filed, the borrower must enter a plea or face an arrest warrant. If the borrower pleads guilty, they must pay a fine on top of the amount owed to the lender.

Jones moved after she borrowing from Cash Plus, so she did not get notice of the charges by mail. Instead, a county constable showed up at her new address. Jones said she was terrified and embarrassed by the charges. She had to enter a plea in the case or else face an arrest warrant and possible jail time. In addition to the fines, Jones was unable to renew her driver’s license until the case was resolved.

Craig Wells, the president and CEO of Cash Plus, which is based in California but has about 100 franchises in 13 states, told HuffPost that “this was the first I’ve heard of this case.” He said that the company instructs its franchises to adhere to all state laws and regulations. On the company’s website, Wells says his goal is for Cash Plus to be “as-close-to-perfect-a-business-as-one-can-get,” adding that the company’s “top-notch customer experience keeps them coming back over and over again. ”

Emilio Herrera, the Cash Plus franchisee who submitted the affidavit against Jones, told HuffPost that he does not remember her case. But he added that he tries to work out payment plans with all his customers, and that it is common for his customers to pay back loans in very small increments.

In response to a request for comment from HuffPost about Appleseed’s letter, Consumer Financial Protection Bureau spokesman Sam Gilford said, “Consumers should not be subjected to illegal threats when they are struggling to pay their bills, and lenders should not expect to break the law without consequences.”

One reason that lenders’ predatory behavior continues is simple administrative overload. Travis County Justice of the Peace Susan Steeg, who approved the charges against Jones, told HuffPost that due to the volume of bad check affidavits her court receives, her office has been instructed by the county attorney to file charges as affidavits are submitted. The charges are then passed along to the county attorney’s office. It is up to the county attorney to review the cases and decide whether to prosecute or dismiss them.

But Travis County Attorney David Escamilla told HuffPost that his office had never instructed the Justice of the Peace courts to approve all bad check complaints, and said he did not know why or where Steeg would have gotten that understanding. “We don’t do it,” Escamilla said, referring to the usage of the criminal hot checks process to enforce the terms of lending agreements.

When cases are wrongfully filed by payday lenders, how quickly they are dismissed depends on prosecutors’ workload and judgment. Often, it is not clear that theft by check cases are payday loans, since the name of the payday lender is not immediately distinguishable from that of an ordinary merchant.

District attorneys may also receive these complaints and have the ability to file criminal charges. According to Ann Baddour, a policy analyst at Appleseed, the DAs seem to operate with more discretion than the county attorneys, but the outcomes were arguably as perverse. Baddour said one DA told her that of the hot check complaints he had received, none had led to criminal charges or prosecutions. Instead, he said, his office sent letters threatening criminal charges unless the initial loan amounts plus fees were repaid.

The DA, who seemed to think he was showing evidence of his proper conduct, was instead admitting that his office functioned as a debt collector.

With the help of free legal aid, Jones’ case was eventually dismissed, and she said the court waived her outstanding payment to Cash Plus. But not all debtors are as fortunate.

Despite being against state law, the data show that criminal complaints are an effective way for payday lenders to get borrowers to pay. Of the 1,576 criminal complaints Appleseed analyzed, 385 resulted in the borrower making a repayment on their loan. In Collin County alone, 204 of the 700 criminal complaints based on payday lenders’ affidavits ended in payments totaling $131,836.

This success in using criminal charges to coerce money from borrowers means that payday lenders have a financial incentive to file criminal charges against debtors with alarming regularity — even if those charges are eventually rightfully dismissed.

Because Appleseed’s study only covered eight of Texas’ 254 counties, there are likely more cases statewide. And Texas is not alone. In 2011, The Wall Street Journal found that more than a third of states allow borrowers to be jailed, even though federal law mandates that loan repayment be treated as a civil issue rather than a criminal one.

“There’s a lot more to learn about the practice itself, how widely it’s used, and its effect on consumers,” Mary Spector, a law professor at Southern Methodist University who specializes in debt collection issues, told HuffPost. “I think they’ve uncovered the tip of the iceberg.”

[…]

New Mexico urged to limit ‘payday’ loan rates

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MARTIN: Encouraged by some developments

One of the worst things a person without the financial wherewithal to repay a loan can do is take out a so-called “payday” or “storefront” loan to buy Christmas gifts.

But, with the holidays here, and because it is so easy to get such loans, that’s exactly what many low-income people are likely to do. Predatory lenders encourage the practice.

That’s the message University of New Mexico law professor Nathalie Martin hopes to get out to would-be borrowers. She would also like to see interest rates capped statewide at 36 percent.

“I think it’s getting a little more likely that the state Legislature will act,” she said.

Martin – and others – are encouraged by a number of developments:

In 2007, with broad bipartisan support, President Bush signed the Military Lending Act, placing a 36 percent limit on interest rates on loans to armed forces personnel. In September, with lenders seeking to circumvent the MLA, the Defense Department proposed new and stronger regulations to shore up the law. The cities of Albuquerque, Santa Fe, Alamogordo and Las Cruces, and Doña Ana County – and the New Mexico Municipal League and Association of Counties – have adopted resolutions supporting a 36 percent annual percentage rate cap. Eighteen states have imposed interest rate limits of 36 percent or lower, most of them in recent years. In Georgia, it is now a crime to charge exorbitant interest on loans to people without the means to pay them back. In 2007, New Mexico enacted a law capping interest rates on “payday” loans at 400 percent. Many of the lenders quickly changed the loan descriptions from “payday” to “installment,” “title” or “signature” to get around the law.

But this past summer, the New Mexico Supreme Court, citing studies by Martin, held that “signature” loans issued by B&B Investment Group were “unconscionable.” B&B’s interest rates were 1,000 percent or higher.

High-interest lenders argue that they provide a much-needed source of funds for people who would not ordinarily qualify for loans, even those who are truly in need. One lender, Cash Store, in an ad typical for the industry promises borrowers that they can get “cash in hand in as little as 20 minutes during our regular business hours – no waiting overnight for the money you need” and boasts a loan approval rate of over 90 percent. It also offers “competitive terms and NO credit required. Be treated with respect by friendly store associates. Installment loans are a fast, easy way to get up to $2,500.”

Pushing a cap

Martin teaches commercial and consumer law. She also works in the law school’s “live clinic,” where she first came into contact with those she calls “real-life clients,” people who had fallen into the trap of payday loans.

“I would never have thought in my wildest dreams that this was legal, interest rates of 500 percent, 1,000 percent or even higher,” she said.

Martin is not alone in fighting sky-high interest rates and supporting a 36 percent cap.

Assistant Attorney General Karen Meyers of the Consumer Protection Division noted that it wasn’t simply interest rates that the Supreme Court unanimously objected to as procedurally unconscionable in New Mexico v. B&B Investment Group.

The court also addressed the way the loans were marketed and the fact that B&B “aggressively pursued borrowers to get them to increase the principal of their loans,” all of which constitutes a violation of law.

In another lawsuit from 2012, New Mexico v. FastBucks, the judge found the loans to be “Unfair or deceptive trade practices and unconscionable trade practices (which) are unlawful.”

Long legal road

Both the B&B and Fastbucks cases were filed in 2009 and ultimately went to trial. The time period indicates the commitment of the Attorney General’s Office and how long it takes a case to wend its way through the legal system.

Each of the cases dealt with one business entity, although they often do business under several names. B&B, for example, an Illinois company, operated as Cash Loans Now and American Cash Loans.

According to the president of B&B, James Bartlett, the company came to New Mexico to do business because “there was no usury cap” here.

Early this year, a survey by Public Policy Polling found that 86 percent of New Mexicans support capping interest at an annual rate of 36 percent. Many people think that is too high.

Meyers said predatory lending profits depend on repeat loans. Analysts estimate that the business only becomes profitable when customers have rolled over their loans four or five times.

‘Really heartbreaking’

“We have interviewed a lot of consumers,” she said. “It’s really heartbreaking.”

Steve Fischman, a former state senator and chairman of the New Mexico Fair Lending Coalition, said three-fourths of short-term borrowers in the state roll over loans into new loans, which is precisely what predatory lenders want.

“New Mexico is one of the worst states when it comes to such loans, because we have the weakest law,” he said.

The coalition is working with lawmakers to draft a bill that would impose the 36 percent cap. It is likely to come up in the next session. But the chances of passage, despite popular sentiment, are unknown.

The Legislature has failed to act in the past, Fischman said, largely because of the many paid lobbyists – including former lawmakers – working for the lenders. He described the Roundhouse back-slapping as “bipartisan corruption.”

The National Institute on Money in State Politics, a nonpartisan national archive of such donations, reports that, thus far this year, payday lenders have made 122 contributions totalling $97,630 to state lawmakers.

Opponents of storefront loans say one way some lenders entice the poor into taking out loans is to cajole them with smiles and misinformation. Loan offices – often in lower-income neighborhoods – often become places for people to hang out and socialize. Agents behind the loan office desks pass themselves off as friends.

But, Fischman said, “A lot of people thought Bernie Madoff was their friend.”

Creating crises

The Pew Charitable Trust and the Center for Responsible Lending, acting independently, reported last year that the cost of the loans turn temporary financial shortfalls into long-term crises. After rolling their initial loans over, perhaps more than once, borrowers find that they’re paying up to 40 percent of their paychecks to repay the loans.

Prosperity Works, an Albuquerque-based nonprofit striving to improve financial circumstances for lower-income New Mexicans, is a strong supporter of the effort to cap loans.

President and CEO Ona Porter said one drawback of the short-term, high-interest loans is the effect they often have on individuals’ credit ratings. “And credit scores are now used as a primary screen for employment,” she said.

The loans do little, if anything, to boost the state’s economy. A 2013 study by the Center for Community Economic Development found that, for every dollar spent on storefront loan fees, 24 cents is subtracted from economic activity.

UNM’s Martin has conducted five studies related to high-cost lending practices. She firmly believes that low-income people are better off if they don’t take out unlimited numbers of high-cost loans and that such forms of credit cause more harm than good.

“They are neither safe nor affordable,” she said.

[…]

GNPC defends $700m loan

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General News of Tuesday, 11 November 2014

Source: Graphic Online

GNPC defends $700m loan

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The Ghana National Petroleum Corporation (GNPC) has defended its action to secure $700million from the international market to enhance its operations.

In a statement issued in Accra yesterday, the GNPC said the amount would be used to support its increasing oil and gas infrastructure investment and cash requirements from its participating and commercial interests.

Additionally, it said the loan would be used to provide guarantees for the Offshore Cape Three Points (OCTP) contractors for the offtake of natural gas from the field.

According to the corporation, based on the expected outcome of ongoing negotiations, it expected to raise a bank guarantee of about $200 to US$300 million.

Apart from providing guarantees, it explained that the loan would be used to augment its working capital, including oil and gas trading working capital needs.

The move by the GNPC has generated intense debate in Parliament and on media outlets.

While some members of Parliament have contended that the GNPC had erred in securing the loan without seeking parliamentary approval, others believe that the amount would not be used for the intended purpose.

Confirming that it was securing the $700million, the statement explained that the tenure of the loan would be five years with an interest of 4.43 per cent.

Justifying its action to secure the loan, the GNPC said the corporation could not continue to fund its operation from its resources on a sustainable basis given the national consensus for increased national participation in the industry.

Within 15 years funds from the public sources for GNPC capitalisation would cease and, therefore, it was prudent for the corporation to build up capital for its growth. This is normal commercial practice. No serious company lives from year- to- year (hand to mouth),” it stated.

Explaining further the rationale behind the loan facility, the GNPC said it was in negotiations with the Offshore Cape Three Points (OCTP) partners to pay for the pipeline and receiving facility in the OCTP (Sankofa-GyeNyame field) gas development project to enable a lower gas price to Ghanaian consumers.

That investment, it said, would amount to $493 million. This will save the country from paying 22 per cent interest if the partners were to pay for that investment.

Furthermore, the statement said GNPC had an immediate requirement of US$105 million to pay as part of natural gas price negotiated with the OCTP partners.

The effect of such measures, it explained, was to lower gas prices paid by Ghana to the OCTP partners and thus reduce electricity costs to Ghanaians.

Again, the statement said the GNPC had a commitment to pay $36 million, being 40 per cent of the pipeline cost to connect TEN gas to the Jubilee FPSO.

“This is necessary to send the TEN Field gas to the Ghana National Gas Company (Ghana Gas) for processing. This will save the country from paying 15 per cent interest if the partners were to pay for this investment.

“The facility was not for undertaking exploration. Nobody borrows to finance exploration. However, there are ongoing development costs,” it said.

On the vexed question of whether or not the GNPC needed a parliamentary approval to secure a loan, the statement explained that approvals required for GNPC borrowing, in line with Section (15) of Ghana National Petroleum Corporation Act, 1983 (PNDC Law 64) included approval by the Minister of Finance upon recommendation by the Minister of Energy and Petroleum.

According to the statement, the GNPC secured the approval from the Minister of Finance upon recommendation by the Minister for Energy and Petroleum.

It categorically stated that “GNPC does not require parliamentary approval to borrow. GNPC sought and secured a legal opinion from the Attorney General as well to this effect.”

The statement refuted any claims that the GNPC was using Ghana’s oil as collateral for the loan

Rather, it explained the GNPC was only using its share of oil revenue, as provided for by the Petroleum Revenue Management Act (PRMA), to secure the loan.

It said the government’s share was not included at all in the effort to borrow money.

On how competitive the process was, the statement said the GNPC embarked on a competitive process in March 2014, to raise $500million to $700 from the international financial market and that the process followed was in line with the GNPC Law 64.

According to the statement, the GNPC was investing $54million to increase its stake in the Deepwater Tano Cape Three Points block in which together with Hess it had made seven discoveries.

It said about $15billion to $20 billion was expected to be invested within the decade to appraise and develop new discoveries as the industry was growing in size and was expected to reach $20billion by 2015 and $60billion by 2022.

“GNPC is repositioning itself to take commercial leadership in the industry, to become local content enabler,” it said.

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Are You Cash-Strapped? Avoid These 5 Potential Scams

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If money’s tight, you’re probably looking for any way to get some cash and get it quick. But if you don’t do your homework, you could end up in a worse situation.

Scam artists prey on vulnerable consumers by making them think they have solutions to financial woes when they’re really just trying to take their money.

With consumer debt at a whopping $11.28 trillion, it’s easy to see why con artists try to take advantage of people in dire financial straits.

“When the economy goes into recession, these organizations and scam artists come out of the woodwork,” says Steve Bernas, president and CEO of the Better Business Bureau of Chicago and Northern Illinois. “People who need money are really grasping at any straw to stay afloat.”

Here are five potential schemes to watch out for:

Advance-Fee Loans: Any loan company that asks you to pay fees upfront before approving a loan is breaking the law. In this scheme, the con artist insists on the consumer paying taxes or fees before they’ll issue the loan. (A legitimate lender also will charge fees; but they’ll take it out of the money they lend you.) Red flag No. 1: If a loan company doesn’t care about your credit history, you probably can’t trust them. They don’t care about your credit because they never intend on giving you the loan. Red flag No. 2: Don’t trust a loan company that keeps calling you. Often these scams are based in other countries. Scammers may “spoof” local numbers, so it looks like you’re getting a call from a legitimate U.S. number, but you’re not. Work-from-Home: The potential to earn cash from your bed sounds great. The problem is that scam artists know this, too – and they try to sell people expensive starter kits or training or make them put in lots of unpaid hours before their fake “opportunity” disappears. These schemes can take many forms, including envelope-stuffing, assembly or craft-work, rebate processing, online searching and medical billing. The reality, says the FTC – “many of these jobs are scams.” Make sure you thoroughly research any work-from-home offer and fully understand the compensation plan. For more, the FTC’s website HERE. Lotteries and Giveaways: Legitimate sweepstakes do not ask you to pay money to increase your odds of winning. Nor do they ask you to wire money to insure your winnings or pay taxes before you can collect your prize money. If you receive a prize notification mailed by bulk rate, it’s probably fake; ditto with overseas lotteries. And beware any sweepstakes offer that says you have to attend a sales presentation to win a prize. You will be put into a high-pressure meeting that forces you to act fast before the prize or opportunity is gone. Mortgage Relief: Watch out for foreclosure rescue scams. Some companies offer phony counseling or phantom legal help. The scammers tell you to a pay a fee for them to negotiate with a lender to lower your mortgage payments. But once you send your money, they stop communicating with you, leaving you in worse shape with your lender. Other scams involve title fraud, such as “rent-to-buy” schemes in which scammers have you surrender the title to your house. Similarly, the bait-and-switch loan scam asks you to sign for a new loan to make your mortgage current, but in the documents, there’s a section that surrenders the title to your house in exchange for the rescue loan. Student Aid: The first thing to remember is don’t pay to find aid money. The Free Application for Federal Student Aid (FAFSA) is – just like the name says – free. Use the FAFSA to apply for federal grants and loans. You don’t need to pay a service to find these for you. If you’re struggling with student debt, the government can help you consolidate your student loans — for free. For info on consolidation as well as federal student aid programs, check out https://studentaid.ed.gov/

Inoculating yourself against rip-offs:

Deals that seem too good to be true most likely are. Don’t fall for miracle offers. Do not pay with money orders, cash or wire transfers whenever possible. Often times a credit card company can stop a fraudulent payment within 60 days. Research companies before doing business. Check with the Attorney General in the state in which the company operates, the Better Business Bureau and other online consumer sources. For trustworthy, non-profit consumer credit help, contact the National Foundation for Credit Counseling. Check out the Internet Crime Complaint Center and the Federal Trade Commission for more tips and ways to file a complaint about a scam. You can do so at the BBB too.

Got a consumer problem? The ABC News Fixer may be able to help. Click here to submit your problem online. Letters are edited for length and clarity.

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Suit: Companies Duped Victims Struggling With Student Loan Debt

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Two companies that promised to help Americans struggling with student loan debt instead allegedly pocketed their money and did little or nothing to help them, in a scheme that one state regulator warned is an emerging area of fraud nationwide.

Illinois Attorney General Lisa Madigan filed lawsuits Monday against the companies, First American Tax Defense LLC of Chicago and Broadsword Student Advantage LLC of Frisco, Texas, alleging they charged large upfront fees for bogus services or for government programs that consumers could have obtained for free. The suits are the first of their kind aimed at an industry that has drawn scrutiny from federal and state authorities.

The lawsuits contend that the companies preyed upon people who were desperate to lighten their student loan burdens. The companies allegedly charged consumers illegal upfront fees as high as $1,200 or tacked on monthly recurring fees, claiming they could reduce or eliminate their student loan debt or consolidate their loans. Representatives of the companies could not be reached for comment Monday.

First American touted its expertise in enrolling consumers in a so-called “Obama Forgiveness Program” and charged consumers for borrowers’ assistance applications that are free of charge through the U.S. Department of Education, the suit alleges. Some consumers said First American employees claimed to be affiliated with the federal education department and charged people $700 to $1,199 in illegal upfront fees, according to the suit.

Got a consumer problem? The ABC News Fixer may be able to help. Click here to submit your problem online. Letters are edited for length and clarity.

U.S. student loan debt has hit a whopping $1.2 trillion, making it an area ripe for fraud, consumer advocates say. Many of the 40 million Americans who have student loans have low-paying jobs and are having a tough time making their monthly loan payments.

In some cases, teachers, nurses, police officers, fire fighters or other public service workers were specifically targeted. Broadsword’s radio ads told public sector workers that “your entire student loan can be forgiven – you heard correctly.” Other consumers, the ads said, could “potentially cut their payments in half” or get other relief, the lawsuit alleges. Some consumers were steered into agreements requiring $499.99 upfront and a recurring monthly fee of $49.99 — money that actually went to a related financial planning company, not a debt relief organization, the suit says.

Alleged potential victims included Sharone Brown, a Chicago police officer who contacted Broadsword while struggling to pay her mortgage and student loan debts. Brown said a Broadsword rep told her he could reduce her payments to $49 a month, down from about $450 – but she’d have to pay about $600 in fees.

“He said, ‘We can definitely help you, Mrs. Brown – that’s what this program is all about,’” Brown told ABC News. “He was so excited … he said, ‘You do not know how happy I am that I’m going to be able to help you.’”

Brown, who has a master’s degree in professional counseling, thought it sounded too good to be true, however, so she called the U.S. Department of Education. That’s when she learned that the federal program the rep had pitched wasn’t going to be active until 2017, she said.

Brown said she has since negotiated her payments down to about $308 a month and has made them all on time.

As for the debt relief companies, the police officer who works with at-risk youths said, “I think it’s a shame. … Sometimes people tend to prey on those who are the most vulnerable.”

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Payday Loan Case Showcases Brutal Interest Rates in an Industry …

Online lender Geneva Roth Ventures Inc., based in Mission, Kan., and its CEO have faced legal issues in recent years that illustrate the controversial tactics used by such companies and the increased scrutiny they draw from state and federal regulators.

Several state agencies have joined the Consumer Financial Protection Bureau and the Federal Trade Commission (FTC) to combat the problem. In Arkansas, Geneva Roth agreed to pay $60,000 to the attorney general’s office after the state argued that the company’s annual percentage rate (APR) ranged from 364 percent to 1,365 percent, compared to the 17 percent maximum allowed under the state constitution. In Connecticut, the state banking commissioner issued a cease-and-desist order that accused Geneva Roth of charging multiple customers interest rates of more than 700 percent. Several states have barred Geneva Roth from doing business. In another case against it, a Montana woman took out a $600 payday loan from the online lender. The company made electronic withdrawals from her bank account, eventually taking out more than $1,800 in interest charges alone, which calculated as an APR of 780 percent.

“Payday lending is right up there among our top issues,” said Nikhil Singhvi, staff attorney for the FTC. The lenders, however, especially those that operate online, can be difficult to track. Geneva Roth and other online lenders argue that their loans do not fall under state law. Some lenders move into Native American tribal jurisdictions or overseas to avoid prosecution, and others operate under a variety of names. The lack of a concrete business locations make online lending cases more complex, since consumers cannot go back to a store and make a complaint face to face.

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