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Online payday loan company forced out of Missouri | FOX2now.com

ST. LOUIS, MO (KTVI) – A South Dakota based online lender agrees to stop doing business with Missouri consumers. Attorney General Chris Koster is forcing the payday loan company out of Missouri.

As many as 6,300 Missouri consumers are victims. Each applied for online loans with one or more of the 8 operations run by a single individual.

Martin “Butch” Webb was doing business from a Native American reservation in South Dakota. The computer loans are short term with outragious fees and requires the consumer agree to wage garnishment if needed to ensure payback. Now, the lender must pay $270,000 in restitution and immediately stop collecting on outstanding loan payments.

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.

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There Are More Payday Lenders in US Than McDonald's – NBC News

There are more payday lenders in the U.S. than McDonald’s or Starbucks, reflecting economic conditions in which fast money is even more important than fast food.

Payday lending, in which users pay a fee for what amounts to an advance on their paychecks, has blossomed over the past 20 years. There are now more than 20,000 across the country, according to the St. Louis Federal Reserve, while McDonald’s boasts 14,267 locations.

They’re used most often by people who lack access to ordinary credit—often those at or near the bottom of the economic spectrum, with nearly a quarter living on public assistance or retirement income.

While the loans can fill a need for fast cash, they also can become a way of life for users who end up paying effective annual percentage rates, or APRs, well in excess of 300 percent.

Consequently, they’ve attracted the attention of regulators, politicians and economists why worry about those left behind in a decidedly uneven economic recovery.

“A large number of Americans are literally living paycheck to paycheck. They’re one unplanned expense away from being in financial distress.”

“A large number of Americans are literally living paycheck to paycheck,” said Greg McBride, chief financial analyst at Bankrate.com. “They’re one unplanned expense away from being in financial distress.”

McBride cited some sobering statistics: Twenty-six percent of Americans have no emergency savings and 41 percent say their “top financial priority” is simply staying current with their expenses or getting caught up on their bills. This is occurring even as the financial headlines trump new stock market highs by the day and President Barack Obama’s administration touts the U.S. economic recovery.

“Americans that have assets have seen the value of those assets appreciate, but Americans who don’t have those assets, they’re not feeling the recovery in their pocketbooks, particularly at a time of stagnant income,” McBride said. “If you don’t have those things, and you haven’t seen a pay increase, then you’re no better off, you’re no wealthier.”

Finding Themselves Poorer

Those using payday loans, in fact, may find themselves poorer.

The mean, or typical, payday borrower makes $22,476 a year and paid $458 in fees. However, a quarter of those borrowers paid $781 or more in fees due to repeat usage, according to the Consumer Finance Protection Bureau, which is closely monitoring the approximately $50 billion industry and will likely put forward more regulation.

About 48 percent of borrowers had done 10 transactions in the CFPB’s time sample, and 14 percent had more than 20 transactions. The median borrowing amount was $350, for a 14-day term. Median fees for $15 per $100, which computes to an APR of 322 percent.

In all, consumers using payday loans were on the hook to their lenders for 199 days, or about 55 percent of the year.

“It appears these products may work for some consumers for whom an expense needs to be deferred for a short period of time. The key for the product to work as structured, however, is a sufficient cash flow which can be used to retire the debt within a short period of time,” the CFPB wrote in a 2013 report studying the payday proliferation.

“However, these products may become harmful for consumers when they are used to make up for chronic cash flow shortages,” the report continued. “We find that a sizable share of payday loan and deposit advance users conduct transactions on a long-term basis, suggesting that they are unable to fully repay the loan and pay other expenses without taking out a new loan shortly thereafter.”

A year ago this month the bureau began accepting consumer complaints and received thousands soon after, according to the St. Louis Fed, which in its own recent report cited the potential for payday loans to “become a financial burden for many consumers.”

Payday lending is allowed in 36 states, and fees are lowest in the states that regulate them.

Bankrate’s McBride cautioned, however, that excessive regulation could be problematic if it ends up denying cash-strapped consumers who can’t get conventional loans or credit cards access to emergency funds.

“That’s a double-edged sword,” he said. “In some ways it can benefit consumers but in some ways it can hurt consumers. Limitations on how often that borrowed amount can be rolled over could keep consumers from falling into a bottomless pit of debt. But there’s certainly a fine line. These services exist because the demand is so high. The reality is a lot of Americans need short-term credit.”

First published November 24 2014, 12:16 PM

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Gov. Nixon Veteoes “Sham” Payday Loan Legislation « CBS St. Louis

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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.

[…]

Stagnant puddle

are wasting the Federal Reserve’s largesse. The central bank has swollen the cash balances at financial institutions with quantitative easing, but has not even kept pace with nominal .

The numbers are stark. Since March 2008, the has increased its holdings of Treasury and federally backed mortgage securities from $700 billion to $4 trillion. To pay for these, it mostly printed money. More technically, it provided banks with $2.7 trillion of new reserves, according to St. Louis Fed data.

The banks didn’t use the funds to stimulate the economy. Commercial and industrial loans, the principal driver of sustainable expansion, have increased by about 12 per cent, to $1.7 trillion. Consumer debt has jumped 44 per cent, but accounts for a smaller piece of the pie. The banks could have afforded such slow paces of loan growth, well below the 16 per cent increase in nominal GDP, without any help from .

Rather, the Fed’s money-printing accounts for the extra cash on banks’ balance sheets. Their holdings of cash, according to Fed data, have increased by 779 per cent to $2.8 trillion over the past six years. For banks, that does not mean piles of crisp new bills, but the balances at the Fed do pay a 0.25 per cent interest rate. Meanwhile, banks now lend out just three-quarters of their deposits, compared with more than 100 percent in March 2008.

The central bank’s purchases may not have contributed directly to economic growth. Still, they have been good for bank profits, because the cash at the Fed earns a little interest income without needing any equity backing, according to the Basel technique of calculating capital strength. QE has also helped keep up financial asset prices, as the ample supply of ready cash probably encouraged banks to increase their investments in longer-term government and so-called agency securities by 63 per cent, to $1.8 trillion.

On the other hand, the Fed’s intervention has not been the inflationary disaster feared by monetarist economists. Funds kept in the central bank’s isolation ward do not infect the economy with wage and price increases.

If the Fed wants banks to push money out into the real economy, it should stop paying them for cash deposits. Instead, it could start charging. A negative 0.5 per cent interest rate on reserves might encourage lending. It might also stimulate higher inflation.

[…]

Shop for a loan before shopping for a car

If you’re shopping for a car loan, here’s some advice:

• Get preapproved for a loan before you walk into a car dealer. You’ll know how much car you can afford, and you’ll have a loan that you can compare to the dealer’s loan offer.

• Check out local credit unions — they tend to charge less than banks.

• Don’t fixate on the monthly payment. That’s important, but focusing on the payment alone can make you vulnerable to a long-term, high-interest loan.

• Opt for the shortest-term loan that you can afford.

Now for the details.

An uneducated buyer is putty in the hands of a car dealer. He’ll shape the financing to profit the dealership, not you.

“Dealers love to focus on the monthly payment. It gives them huge flexibility,” says Rob Swearingen, a lawyer at Legal Services of Eastern Missouri who defends poor consumers in auto loan cases.

For instance, they can get the monthly payment down by adding years to the term of the loan, while charging a higher interest rate. The consumer may pay a lot more over the long run, says Tammy Hampton, a vice president at Gateway Metro Credit Union.

“It could be a nine-year note at 10 percent interest, and they (the customers) don’t care. They only care about the monthly payment,” Hampton says.

So, a smart consumer shops for a loan and gets approved in advance. Hand the offer to the dealer and say, “Beat this.”

The St. Louis consumer has dozens of lenders to choose from. You can get a partial list at sites such as Bankrate.com and WalletHub.com or inside this business section. Take their advertised interest rates with caution. They’re often the best rates offered to people with very good credit. You may well pay more.

WalletHub, a personal finance website, surveyed 137 auto lenders around the country last fall. Credit unions offered lower rates, at 40 percent below the banks. Meanwhile, small local banks tended to charge more than the big national banks.

For a new car, auto manufacturers tended to offer the best rates of all, averaging 42 percent below the banks. However, cut-rate loans are often offered as an alternative to cash off the sticker price. Depending on the details, you might be better off taking the cash.

“Keep an open mind about where you’ll get your car and your financing,” says John Kiernan, senior analyst at WalletHub.

You can usually apply for a loan online for free with a verdict back in a day or less.

You might try several in search of a good deal. But do all your applying within a day or three. Credit scoring companies count the times your credit is checked by lenders. If they see a lot of checks in rapid succession, they’ll think you’re shopping for a loan and ignore it. If they see lots of checks over a prolonged period, they’ll think you’re in trouble and cut your credit score.

You can get a free copy of your credit report from each of the three major credit agencies once a year at annualcreditreport.com or at 1-877-322-8228. Check it for errors before you ask for a loan.

There are several moving parts in an auto loan — your monthly payment, the length of the loan, the fees and interest rate. Uncle Sam mandates a handy comparison tool for comparing loans — the APR, or annual percentage rate. That’s a measure of the loan’s price, including fees and interest, expressed as an annual percentage of the loan amount.

Under the law, the APR has to be disclosed to the buyer, but you may not see it until the final moments before signing. So ask for it in advance.

Opt for a short loan length if you can. It means a higher monthly payment, but less money lost to interest. On a $15,000 loan at 4 percent, you’ll save $632 in interest by opting for a three-year loan instead of five years.

A short payoff period may also avoid “gap insurance,” which might run $300 or more. That comes into play when the value of the car drops more quickly than the principal left on the loan.

This makes it tough to trade in the car for a better model. Worse, it could leave the owner on the hook should the car be totaled in a wreck. Auto insurance pays only the value of the car, not the amount you owe. Thus the need for gap insurance.

Swearingen’s law firm is a charity outfit. His clients are poor people, often with lousy credit. They find themselves stuck in subprime auto loans with interest rates of 20 to 25 percent. Such rip-off deals often contain add-on services that raise the cost even higher.

Some of those borrowers might well qualify for better loans than the dealership is offering — if they shop around.

But if a stinky loan is all you’re offered, consider a bicycle and a bus pass.

Save what you’d spend on a car payment until you have enough cash for a cheap, ugly clunker. Drive it until the wheels fall off.

Keep saving the car payment while you’re rattling along in your rustmobile. By the time the old beater gives out, you’ll have saved enough for a nicer car.

A $200 monthly car payment, saved in a bank for five years, will get you $12,500, and some reliable wheels.

The old-beater option is also a good move for young people just starting out.

Kiernan, 26, drives an ancient Volvo.

“Safe and cheap,” he says. “It gets me there alive and on time, and I’m cool.”

[…]

Nixon, Star, News-Leader and Post-Dispatch agree: Payday Loan …

Image Payday-Loans.jpg

Submitted by Sarah on Wed, 03/05/2014 – 11:39

Missouri Gov. Jay Nixon, the Kansas City Star, the Springfield News-Leader and the St. Louis Post-Dispatch have all reached the same conclusion: Sen. Mike Cunningham’s payday loan ‘reform’ bill is a joke.

Gov. Nixon criticized the bill, saying it “weakens protections for Missourians.” The Kansas City Star says the bill “is a gift to the industry disguised as reform.” The Springfield News-Leader says “it gives this predatory industry what it wants — free rein to rake in outrageous profits.” The St. Louis Post-Dispatch calls it “phony,” warning “it’s not really a reform. …[T]he working poor are going to take it in the shorts. Again.”

Cunningham’s SB 694 bans loan renewals and requires lenders to give borrowers a longer repayment period. These may sound like good ideas, but they actually do nothing to rein in the predatory practices of the payday loan industry. Instead of renewing a loan, the payday lender will simply issue a new one. In exchange for these “tighter” laws, the bill removes all caps on interest rates and fees. The typical consumer will be stuck in the same debt trap of sky-high interest rates and fees that end of costing much more than the actuual loan, which is likely why the bill passed out of the Senate with nary a peep from the normally aggressive payday loan industry.

This bill “is a poorly disguised effort to benefit a rich and powerful industry that preys on the poor and powerless.” Missouri legislators should reject it and focus on real reform that will rein in predatory payday lending with laws that cap the annual interest rate and limit the number of loans that can be issued per year.

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Missouri Senate Endorses Bill For PayDay Loans « CBS St. Louis

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Payday loans: Know your rights YouTube

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Animation about payday loans, what you should expect from a payday lender and what you can do if you have a problem with a payday loan. How to Deal with Payd… […]

Hong Kong lenders pioneer loans secured by designer handbags

Hong Kong (Dow Jones) – When 30-year-old housewife Maggie Wong is tight on cash, all she needs to do is reach for her designer purse– and then hand it directly over to a loan officer.

Say hello to the handbag-backed loan, a unique Hong Kong phenomenon. While money lenders typically ask for cars and homes as collateral, Hong Kong’s Yes Lady Finance Co. seeks its customers’ beloved handbags.

The four-year-old company accepts handbags on the spot, assesses them for their condition and authenticity and then procures loans within half an hour, as long as the bags are Gucci, Chanel, Hermes or Louis Vuitton. Occasionally, they’ll consider a Prada.

In a city driven by consumers’ voracious appetite for the newest and latest luxury products, handbag-driven loans are a lucrative business. Yes Lady takes a purse and loans clients 80% of the bag’s value. Customers get the bag back by repaying the same loan with 4% monthly interest, within four months. Classic purses and special edition handbags often retain much of their retail price.

The company recently gave out a roughly US$20,600 loan in exchange for a Hermes Birkin. But Yes Lady’s purse-backed loans come in all sizes and start at around US$190 with no upper ceiling.

Yes Lady is carving out a niche for itself in a city with 200 licensed pawnbrokers and over 900 moneylenders. The pawn industry, one of the city’s most traditional forms of lending, targets primarily poorer residents and foreign domestic helpers. Pawnbrokers typically only accept watches, jewelry and electronics as collateral.

But unlike pawnbrokers, Yes Lady, whose Cantonese name translates to “Rich Woman,” has a different customer in mind: wealthy locals whose money is tied up– sometimes literally– in a luxury accessory.

Despite Hong Kong’s numerous banks that offer low interest rates on consumer loans, many residents look to nonbank lenders for their flexibility in loan size and collateral type. While banks are regulated by the Hong Kong Monetary Authority, non-banks are subject to the more flexible guidelines set out by the Money Lenders or Pawnbrokers Ordinance.

As a result, Yes Lady doesn’t need to ask customers to show proof of income or undergo a credit check. All they require is a Hong Kong identification card and address.

Ms. Wong says she uses the service when her short-term cash flow is tight because her money is locked up in the stock market or fixed saving deposits.

“I don’t want to go through all the complicated application procedures in the banks,” said Ms. Wong, who uses the money to pay for things like her 5-year-old son’s tuition fees as well as daily expenses.

In the last year, she has traded in three purses, Guccis and Louis Vuittons, for a total of US$1290. She repaid the loans and now has the bags back.

For some customers, a purse loan is simply less risky than a credit advance, which requires repayment and is tied to one’s credit rating.

Angel Yam, a white-collar office worker, says she doesn’t really care if she gets back the Chanel purse she recently traded in for a total of roughly US$1,550. “I have too many idle handbags at home,” she said. “I don’t feel any loss when I take some of them as collateral for loans.”

Ms. Yam used the loan to fund her travel and to buy stocks. She has over 40 handbags, including a dozen which are luxury brands.

Manager Irene Chu says Yes Lady typically attracts locals who need short-term cash because they had a bad week in the stock market or have their money tied up in investments. Many, Ms. Chu says, own several bags and don’t mind parting with one temporarily while they come up with the money.

To determine the value of the purse, Yes Lady brings in expert assessors from its affiliate Milan Station, a luxury secondhand purse chain whose stock has tumbled from 2.96 Hong Kong dollars to HK$0.39 since its 2011 IPO.

At Yes Lady’s two offices in Hong Kong, Ms. Chu says roughly one in five purse-loan customers are men. Partner company Yes Man Finance Co. is located directly next door.

The invasive knifefish, like the janitor fish before but is more intensely carnivorous, is hoped to be eliminated in Laguna Lake. Some 10,000 kilos of knifefish per day are now caught there.

Called the Big Bully, knifefish has been preying on the country’s native fishes – ayungin, biya, kanduli. While the knifefish may not be toxic to human, its food value is much less compared to the locally-raised fishes which can command a price of P100 to P150 per kilo.

It is destroying fishermen’s fish cage revenue amounting to some P2 billion.

[…]