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Payday Loans Entrap the Most Vulnerable – Roll Call

Payday Loans Entrap the Most Vulnerable | Commentary


By Galen Carey

As our economy continues to improve, there is a crushing weight holding many back: payday loans. While state and local leaders have taken up the cause in certain jurisdictions, this is a national problem that requires Congress to act. Unscrupulous lenders lure those who are already facing financial hardship into a debt trap from which it is very difficult to escape.

Drawn by slick marketing, desperate borrowers are induced to accept unfavorable terms they may not fully understand. The cost of a typical payday loan exceeds 300 percent annual percentage rate. By requiring full repayment from the next paycheck, payday lenders virtually guarantee that the borrower will be forced to ask for a new loan, with additional fees and interest, to pay back the old one.

This violates the underwriting standards applied to virtually every other type of loan. Payday loans perpetuate a cycle of debt, poverty and misery.

Three quarters of the fees payday lenders bring in come from borrowers, mostly low income, who have taken out 10 or more loans in a single year. More than half of all payday loans are renewed or rolled over so many times that consumers wind up repaying at least twice the amount they originally borrowed.

We have just come through the busiest season for payday lenders. Their ads promise an easy solution to the pressure of unbudgeted holiday expenses.

Parents understandably want to buy their children Christmas presents, and the lure of readily accessible extra cash masks a real threat to their financial health.

The reality is that a short-term loan almost always creates a debt that the borrower cannot repay in two weeks. Interest and fee payments balloon while the principal remains unpaid. The debt burden often continues long after the Christmas toys have been broken and discarded.

Last October, the National Association of Evangelicals addressed the devastating impact of payday loans with a resolution calling for an end to predatory lending. We are asking churches, charities, employers and government agencies to work together to help our members, neighbors and co-workers in ways that do not exploit them and lead to further misery. Other religious groups, including the Southern Baptist Convention, have made similar appeals.

The Bible prohibits usury, exploitation and oppression of those in need, and there is growing evidence that payday loans, as they are currently structured, often violate biblical justice. Predatory lenders who oppress the poor incur the wrath of God (Exodus 22:21-27). They should apply their expertise and resources to developing stronger communities rather than tearing them down.

Every family needs a rainy day fund to cover unexpected expenses from time to time. Churches should teach the spiritual disciplines of tithing and saving that position members to provide for themselves and generously care for others when special needs arise. It is our responsibility as neighbors and as churches to save and give generously, to provide the neediest among us with every possible opportunity to achieve and succeed. Churches, charities and employers should support households in their communities in times of crisis so as to prevent neighbors from being drawn into long-term debt.

In 2006, Congress passed bipartisan legislation capping the rates on loans issued to service-members at 36 percent annual interest. We need similar leadership from Congress today so that all Americans are protected from financial predators. The Consumer Financial Protection Bureau, an agency established to monitor the increasingly complex array of financial products offered to the American public, plans to unveil a new rule in coming months. We hope the bureau thoroughly investigates the payday industry and establishes just regulations and that Congress supports this process. State agencies should do the same. We need common sense guidelines such as requiring that loans be made at reasonable interest rates, and based on the borrower’s ability to actually repay.

Credit can change lives. It can be a source of opportunity or cause of devastation. How we use and safeguard this powerful tool is our choice. Caring for and lifting up our neighbors is our responsibility.

Galen Carey is vice president of Government Relations for the National Association of Evangelicals.

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Smart boys behind payday loans | The Jewish Chronicle

July 3, 2014

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The great financial crisis (2007-09) sparked all manner of new lenders as the high street banks cut back their lending. We have seen the birth and expansion of peer-to-peer organisations which match depositors and lenders on the web; crowd-funding where like-minded investors club together to fund small breweries or films, and most contentiously the payday lender.

In the Great Recession, payday lenders, who help the less well-off make ends meet before the arrival of the next pay cheque, sprang up on the nation’s high street. They sat alongside discount retailers like Poundland and B&M – a new take on the austerity economy. Arguably the payday lending shop, despite the punishing interest rates charged, removed the moneylenders from the back streets, where they were backed up by brutes wielding baseball bats.

Much disparaged payday lender Wonga, founder by two South Africans, Errol Damelin and Jonty Hurwitz, took matters a step further. Damelin, a single-minded former Israeli paratrooper, brought groundbreaking digital skills to an ancient business activity. Payday lending was combined with cutting-edge Israeli know-how and technology to provide a different kind of instant moneylending.

One would be hard put to understand this from some of the recent media coverage that has painted Wonga as the devil incarnate following a finding by the regulator, the Financial Conduct Authority, that between 2008 and 2010 it sent out 45,000 letters in the names of non-existent lawyers demanding payment of arrears.

Wonga is not drawing on the most vulnerable

Clearly, the use of fake legal credentials was stupid and unacceptable. The legal profession is in high dudgeon and the City of London police have been persuaded to re-open an investigation that previously had closed.

Once a witchhunt is underway, it is hard to stop, even though most of us are subjected to such faux legal pressure on a regular basis in our everyday lives, whether we are paying parking fines or utility bills.

Damelin, who stepped down from Wonga before the storm over “legal letters” broke late last month, is a highly focused figure. When I joined him for lunch as Wonga was moving into take-off mode, he persuaded a reluctant chef at one of London’s most fashionable eateries to whip him up a large bowl of Israeli salad, without the dressing, because he didn’t fancy anything else on the menu.

What he explained was that Wonga’s model was different in several vital respects to other payday lenders. Firstly, it would only lend to people who already had current accounts at banks and had signed up for electronic banking. This cuts out the least well-to-do who do not have conventional bank accounts.

Secondly, his customers needed to be cyber-savvy and own mobile devices such as smart phones and tablets so that they could access Wonga’s website and apps electronically.

These two requirements meant that Wonga, unlike the other payday firms and back street money lenders, were not preying on the poorest of the poor. The point being that unlike other payday lenders Wonga is not drawing upon the most vulnerable groups in society. It is providing an instant cash service to people who need money quickly.

The reality is that if Wonga customers repay their loans rapidly the cost is cheaper than that of an unsecured overdraft at the bank where the charges rise exponentially. It is only when loans are not repaid on time and the interest charges start to ratchet up that they rise to the ghastly 2,689 per cent APR seen in some headlines.

That is terrible but not worse than well-established players like Provident Financial (a publicly quoted company).

Much of this will make the Jewish community uncomfortable even though most publications identify Wonga’s founders as South African rather than anything else. The Bible is extraordinarily tough on usury, and advocates debt forgiveness. And Jews in Britain have suffered, down the ages, from the stereotypes offered by Shakespeare and Dickens, two of the nation’s most lionised literary figures.

It is highly unfortunate that Wonga is now being tainted as an alleged criminal organisation because of the legal letters. Better perhaps if Damelin and friends had chosen to use their brilliance with computer code in a less controversial area. We must be alert to demonisation, drifting into antisemitism.

Alex Brummer is City Editor of the Daily Mail. His book ‘Bad Banks’ will be published by Random House on July 17.

Last updated: 5:45pm, July 3 2014


The “ruinous consequences” of payday lending – Associated Baptist …

“Very few things harden the heart more than usury in all its forms.”A Baptist pastor in North Carolina wrote those words in the October 31, 1840 edition of the Biblical Recorder. Citing a slew of Bible verses from Exodus to Leviticus to Ezekiel, the pastor warned of the “ruinous consequences and the distress brought on a community by usurious and similar practices.”Fast-forward nearly 175 years later and you’ll find Baptists who remain deeply concerned about the “ruinous consequences” of usury or payday lending on their communities. In April, a group of Louisiana faith leaders that included Baptists backed legislation to cap fees on payday loans and modestly limit the number of these short-term, high interest-rate loans a borrower can take out each year. The legislation — which failed after facing significant opposition from the payday industry — would have limited borrowers to 10 payday loans per year.

Yes, just 10 loans.

In Missouri, where annual rates on payday loans can reach 1,950 percent, the legislature passed new “regulations” that the payday industry didn’t even oppose. The St. Louis Post-Dispatch penned an editorial in March calling the reform efforts “phony”: “When a payday lending ‘reform’ bill sails through the Missouri Senate and the payday lending industry doesn’t scream bloody murder, you can be sure…it’s not really a reform.”

The bill, which is waiting for the signature of Governor Jay Nixon, forbids loan renewals and those unable to repay their two-week loan in full can demand a repayment plan to allow borrowers a two-to-four month period to pay off the loan without accruing additional interest.

Simply limiting loan renewals is far from meaningful reform though. A borrower can use his or her next paycheck to pay off the loan and then turn around and take out another loan. As one reform advocate noted, “You can get a loan at one payday shop to pay off a loan at another payday shop.”

In both Missouri and Louisiana, legislators rejected proposals for meaningful reform and emphasized their desire not to kill the payday industry. “I don’t want to put them out of business,” said Missouri Senator Mike Cunningham, a sponsor of the “reform” bill.

Study after study has shown the “ruinous consequences” of payday lending on the working class and in low-income communities across the country. The average annual rate of a payday loan in Missouri is more than 400 percent and elected officials like Sen. Cunningham are worried about putting EZ Cash or Ace Cash Express storefronts out of business?

If your business needs to exploit others in order to survive, something is terribly wrong.

It wasn’t many years ago that lending practices like those of the payday industry were criminal. In fact, for more than 300 years in America, usury was considered to be a serious crime and law enforcement sought to apprehend and incarcerate usurious lenders.

For centuries, usury was judged by poets and philosophers and prophets and priests as an especially persistent and pernicious evil. During the U.S. founding era, interest rates on loans in all 13 colonies were capped between 5 and 8 percent. These caps were rooted in historic Christian understandings of acceptable lending practices. Protestant reformers such as Martin Luther held that interest rates of 5 to 6 percent were moral with 8 percent as a permissible rate in some circumstances.

In the early 20th century, states began to adjust their usury laws to allow for higher rates. The industrial age brought with it more stable household incomes and created a demand for greater access to credit through moderately-priced consumer loans with low double-digit interest rates. Following World War II, all 50 states had interest rate caps on small loans ranging from 24 to 42 percent per year. Thirty-six percent was the median limit.

In 1978, the U.S. Supreme Court dealt a devastating blow to usury restrictions with a ruling that allowed national banks in deregulated states to export its high interest rates to states with strict usury laws. Deregulations and lots of legal loopholes set the stage for the emergence of the payday lending industry in the late 1990s.

During the early 1990s, payday lenders comprised only a tiny fraction of the financial services industry with just several hundred locations. A decade later, there were more than 22,000 payday storefronts in the U.S. The payday loan industry is now a multi-billion dollar enterprise with more than 12 million borrowers spending roughly $7.4 billion annually at thousands of storefronts.

In his recent column “The lie of payday loans,” Steve Wells, pastor of South Main Baptist Church in Houston, Texas, told a tragic story about a man from Waco, Texas who found himself penny-less and possession-less thanks to a payday lender. Wells asked readers to consider why the problem of predatory lending is a problem that should compel Christians and churches to take action.

His response was biblical, straight from the Book of Psalms: “How long will you defend the unjust and show partiality to the wicked? Defend the cause of the weak and fatherless; maintain the rights of the poor and oppressed. Rescue the weak and needy; deliver them from the hand of the wicked.”

Payday lending will continue to bring ruinous consequences and distress to our communities. Let’s speak up, educate others and advocate for reform. Now is the time for Christians and churches to take action.


Salem Communications Announces Expiration of Cash Tender Offer and Consent Solicitation for 9.625% Senior Secured …

CAMARILLO, CA–(Marketwire – Mar 25, 2013) – Salem Communications Corporation (“Salem”) ( NASDAQ : SALM ), announced today the expiration and final results of the cash tender offer (the “Tender Offer”) and consent solicitation (the “Consent Solicitation,” and together with the Tender Offer, the “Offer”) for any and all of its $213.5 million aggregate principal amount of 9.625% Senior Secured Second Lien Notes due 2016 (CUSIP No. 794093 AF1) (the “Notes”) commenced on February 25, 2013. The Offer expired at 12:00 midnight, New York City time, on the night of March 22, 2013 (the “Expiration Date”). In conjunction with the Offer, Salem secured financing consisting of a revolving credit facility of up to $25.0 million and a term loan facility of up to $300.0 million. Proceeds from the term loan facility were used to fund the Offer, to retire all other outstanding corporate debt and to pay related fees and expenses.

On March 14, 2013 (the “Early Settlement Date”), Salem made a payment in cash for all Notes tendered prior to 5:00 p.m., New York City time, on March 8, 2013 (the “Consent Payment Deadline”). As of the Consent Payment Deadline, holders of $212,597,000 in aggregate principal amount of the Notes, representing approximately 99.58% of the aggregate principal amount of the outstanding Notes, had validly tendered and not validly withdrawn such Notes, and validly delivered and not validly revoked consents in respect of such Notes (“Consents”) to the proposed amendments to the Indenture governing the Notes (the “Indenture”). All such Notes were accepted for payment. The holders of the accepted Notes received total consideration of $1,106.54 for each $1,000 in principal amount of Notes validly tendered and not validly withdrawn prior to the Consent Payment Deadline (which includes the consent payment of $30.00 per $1,000 in principal amount of Notes). The total cash payment to purchase such Notes, including accrued and unpaid interest up to, but not including, the Early Settlement Date, was $240,305,859.55.

Between the Consent Payment Deadline and the Expiration Date, no additional Notes were tendered.

A total of $903,000 in aggregate principal of the Notes remains outstanding. As previously announced, on March 14, 2013, Salem issued irrevocable instructions to The Bank of New York Mellon Trust Company, N.A., as trustee for the Notes (the “Trustee”), to redeem on June 3, 2013 any Notes that remain outstanding after the Expiration Date and deposited funds with the Trustee sufficient to satisfy and discharge Salem’s obligations under the Indenture as of such date.

Wells Fargo Securities, LLC and SunTrust Robinson Humphrey, Inc. are serving as the dealer managers for the Offer. Persons with questions regarding the Offer should contact Wells Fargo Securities at (866) 309-6316 (toll free) or (704) 410-4760 (collect), or SunTrust Robinson Humphrey at (404) 926-5051. Requests for copies of the Offer to Purchase or other tender offer materials may be directed to Global Bondholder Services Corporation, the Information Agent, at (866) 470-4500 (toll free) or (212) 430-3774 (collect).

This press release does not constitute an offer to purchase the Notes or a solicitation of Consents to amend the Indenture. The Offer is made solely pursuant to the Offer to Purchase. The Offer is not being made to holders of Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.

Company Information and Forward Looking Statements

About Salem Communications Corporation

Salem Communications Corporation is the largest commercial U.S. radio broadcasting company that provides programming targeted at audiences interested in Christian and conservative opinion radio content, as measured by the number of stations and audience coverage. Upon completion of all announced transactions, Salem will own and/or operate a national portfolio of 99 radio stations in 38 markets, including 61 stations in the top 25 markets. Salem also programs the Family Talk™ Christian-themed talk format on SiriusXM Channel 131.

Salem also owns Salem Radio Network, a national radio network that syndicates talk, news and music programming to approximately 2,400 affiliated radio stations and Salem Media Representatives, a national media advertising sales firm with offices across the country.

In addition to its radio broadcast business, Salem owns an Internet and a publishing division. Salem Web Network is a provider of online Christian and conservative-themed content and streaming and includes websites such as Christian faith focused, Questions and Answers about Jesus Christ at, Christian living focused®, online Bible at, Christian videos at, a leading website providing church media at and Christian radio ministries online at Additionally Salem owns conservative news leader® and conservative political blog, providing conservative commentary, news and blogging. Salem Publishing™ circulates Christian and conservative magazines such as Homecoming® The Magazine, YouthWorker Journal™, The Singing News®, FaithTalk Magazine™, Preaching™ and Townhall Magazine™. Xulon Press™ is a provider of self-publishing services targeting the Christian audience.

This press release contains forward-looking statements conveying management’s expectations as to the future based on current plans, estimates and projections. Forward-looking statements involve inherent risks and uncertainties and Salem Communications Corporation cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. The forward-looking statements contained in this press release include statements related the redemption of the Notes and the satisfaction and discharge of the Indenture. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem Communications Corporation does not undertake to update any of these statements in light of new information or future events, except, with respect to the Offer, as required by law.


Company Contact

Evan D. Masyr

Salem Communications

(805) 384-4512

Email Contact

Gov. Phil Bryant gets bill permanently allowing payday loans …

Gov. Phil Bryant (AP Photo/Rogelio V. Solis)

JACKSON, Mississippi — Mississippi lawmakers may never have to debate payday loan interest rates again.

The state Senate gave final approval Friday to House Bill 559, which deletes the requirement that lawmakers periodically renew authorization for the loans. The bill passed the Senate 31-13 and goes to Gov. Phil Bryant for his consideration. It would become law immediately.

At Mississippi payday lenders, borrowers can get short-term loans by writing checks that cover the amount borrowed, plus fees. State law gives borrowers 30 days to repay loans, capping fees at $20 for every $100 borrowed up to $250. For amounts $251 to $500, a lender can charge $21.95 per $100 borrowed. That’s a maximum 574 percent interest rate for a two-week loan.

Americans spend $7.4 billion per year on the high-interest rate loans, including an average of $520 in interest per borrower who ends up indebted for five months of the year, the Pew Charitable Trusts reported in February. That group found that most borrowers can’t pay off loans in the short span allowed.

But supporters of the bill say that no matter how distasteful, they’re one of the few options for people to borrow small amounts of money.

“I hope I don’t need that service, but I hope if I do, it’s there,” said Sen. Gary Jackson, R-French Camp.

Mississippi had 1,111 licensed payday lenders as of Sept. 30, according to Banking Department numbers. At the time, those lenders had more than 196,000 loans outstanding, with nearly $42 million on loan, an average of a little more than $200. Most loans turn over every two weeks. That works out to about five million loans a year, worth a total of more than $1 billion.

Legislators voted in 2011 to allow payday lenders to operate in the state until 2015. It’s not unusual for state laws to be enacted for a limited number of years. But Jackson said the Legislature should erase the time limit “for peace of mind of the industry.” He also said the federal Consumer Finance Protection Bureau is likely to take over regulation, and state lawmakers would no longer need to worry about it.

“If you delete the repealer, you’re not going to have the opportunity to have the debate on this issue again,” said Sen. David Blount, D-Jackson, who opposed the bill.

Sen. David Jordan, D-Greenwood, said lawmakers should cut maximum rates.

“And put these people out of business?” Jackson replied. “If we legislate away the opportunity to borrow, it does not legislate away the need.”

“As a deacon, you won’t find me pushing a bill like this,” Jordan said.

Jackson, though, replied that the Bible enjoins Christians to lend money without charging interest. “I don’t see you out in the street loaning money either,” Jackson said to Jordan.


State House of Representatives approves bill to allow payday …

Image 8131053-large.jpg

Christine Baker, The Patriot-News/fileState Capitol

Legislation that would legalize two-week payday loans in Pennsylvania won state House approval by a 102-90 vote on Wednesday.

The measure now moves to the Senate, where a GOP leadership source there says it will be reviewed but no decision has been made as to whether it will be considered before the chamber recesses for the summer break.

The bill’s sponsor, Rep. Chris Ross, R-Chester, said the lending practice, that allows people to borrow money against their next paycheck for a fee and interest, is happening in Pennsylvania through Internet and out-of-state lenders. But it is unregulated and provides no consumer protection.

His bill would provide that protection and task the state Department of Banking with oversight.

Among the protections are bans on new payday loans until a prior one is paid off; capping the amount that can be borrowed at $1,000 or 25 percent of gross monthly income, whichever is lower; and limiting the finance charge to $12.50 for every $100 borrowed, plus a $5 fee.

“So all and all, I think we have done what we can to provide a safe and reasonable alternative for those who are caught short,” Ross said.

Rep. Sheryl Delozier, R-Lower Allen Twp., was among the bill’s supporters.

“The Department of Banking did not have the capability to protect the consumers that did make what many of us would say a bad choice in financing their mortgage or some other emergency bill,” she said. “This was put in place to do that.”

Lobbyists for short-term loan providers said their clients are in business and have an expectation that money they loan will be repaid. They supported adding the protections to ensure their clients have a job and a bank account to help ensure the loan gets repaid.

But opponents of the bill equated it to legalizing loan sharking that preys on the state’s working poor. They said a Supreme Court decision made Internet payday predatory lending illegal in Pennsylvania.

“If that is going on, it should be reported and prosecuted. We should not pass a law that legalizes it,” said Rep. Mike Sturla, D-Lancaster.

Rep. Mark Cohen, D-Philadelphia, said payday lending is a practice that leads to repetitive borrowing that eats away at consumers’ paychecks, making it worse than credit card debt.

“Payday lending is aggresive credit card lending on steroids. ti is dangerous,” he said.

Rep. Curtis Thomas, D-Philadelphia, listed a litany of consumer, housing, military and religioius groups who oppose the legislation.

“There is no rational basis for why this body should support this proposal or any other proposal that would legalize loansharking,” he said.

Steve Drachler, executive director of United Methodist Advocacy in Pennsylvania, vehemently disputed any argument that the bill protects consumers from anything.

“They call this consumer protection? Calling this consumer protection makes me want to vomit. Because it’s not. It’s not needed,” Drachler said.

He said the Bible is riddled with warnings against taking advantage of the poor through high-interest loans.

“This is robbing the poor,” Drachler said. “When Jesus went to the money changers where he erupted in anger and overturned their tables because they were taking advantage of the poor and the vulnerable, this legislation parallels what happened” back then.”


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