payday lending

Changing the Subject Doesn’t Make Payday Lending in PA a Better Idea

By Mark Price, Third and State

In legislative hearings last month, proponents of a bill to legalize high-interest payday loans tried to change the subject and questioned the motives of some of their constituents. But these attempts don’t alter the fact that allowing payday lending is a bad idea. 

As we’ve explained before — and as the U.S. military, U.S. Congress, and former President George W. Bush have all agreed — payday loans are a debt trap that further impoverishes low-income families, driving more of them into bankruptcy. Pennsylvania should leave in place the strong regulations that make use of payday loans much less common here than nationally.

Here is a bit more detail on what happened at the September 19 Senate Banking and Insurance Committee hearing on House Bill 2191. Chairman Don White raised the issue of credit cards and alleged that the AARP’s opposition to payday lending was motivated by the organization’s desire to protect a credit card product it offers. At another point, Representative Chris Ross, the sponsor of the bill, warned that payday lenders currently selling a limited number of online payday loans illegally may be stealing the identities of consumers. 

Even if this were true, why does it mean we should legalize storefront payday lenders to locate in local communities throughout Pennsylvania and charge 369% annual interest rates on short-term loans? It doesn’t. 

While the strategy of House Bill 2191’s supporters was to talk as little as possible about the dangers payday lending poses for consumers, more telling was who attended the hearings. The hearing room was full of people who had driven in from around the state — Pittsburgh, Allentown, Philadelphia. Pastors, credit counselors and affordable housing groups showed up in opposition to the bill, even though they weren't testifying.  

Their presence didn’t stop some committee members from questioning the motives of an AARP volunteer and rushing the testimony of a pastor of a social service ministry and a military veteran. The only supporters of the bill were the out-of-state companies that stand to benefit financially from these 369% APR loans.

The will of the people — and the editorial boards — on payday lending is clear. Don’t legalize it. Let’s hope that the will of the people outweighs the dollars of the payday lenders in this year’s end game on this issue.

A Big Win on Payday Lending, at Least for Now

Sorry to take so long for this update, but, despite hundreds of thousands of dollars of lobbying money, the payday lenders have lost a round in Pennsylvania. For now.

Consumer advocates in Pennsylvania won a hard-fought delay on Wednesday against a pending bill in the legislature that would once again permit payday lenders to charge predatory rates and victimize the state’s poor and downtrodden residents.

A bill that passed the Pennsylvania state house earlier this month that would raise the permissible annual percentage rate on small loans to 369 percent will be held in the state senate until the next legislative session in the fall, according to activists fighting against the bill.

The goal of the payday industry was to ram this through, quickly. Why? Because, the more attention legalizing loan sharking gets, the worse it is for the industry, and those who would enable it. So, while the payday lenders will be back in just a few short months, the delay into the fall is a real, substantive victory, won by a coalition of consumer advocates, religious groups and military veterans.

Of course, the battle is not over. And, in fact, the State Senators that still need the most education on the topic are largely the same ones that seemed on the verge of passing it. So, be ready in a few months, because a win is sweet, but a long term win would be a hell of a lot better.

These are the Philly State Senators who May Bring Payday Lending Back to PA

As discussed on Friday, the payday lending industry is spreading money around Harrisburg, in an attempt to return to Pennsylvania, all under the guise of a consumer protection bill… that has no support of any consumer protection groups. As I noted then, the payday lending bill barely passed the House of Representatives, depending on the support of some of Philly’s own State Reps—Keller, Taylor and Sabatina- to do so.

The bill is now in the Senate, and after talking with people in the know, here are the Philly State Senators that have, at minimum, wavered in stating their unequivocal opposition to bringing payday lenders and 300% plus interest rates back to Pennsylvania:

  • Michael Stack, (717) 787-9608
  • Anthony Williams, (717) 787-5970
  • Shirley Kitchen, (717) 787-6735
  • Leanna Washington, (717) 787-1427

None of these Senators have necessarily said that they support this bill, and Stack has basically said he is against it. But, the sense is that the four of them are wavering and that they may be looking for something— some additional pointless amendments for example— that would give them cover to vote for it. This is just wrong. There is no secret middle ground here— either you are against bringing an abusive industry back to Pennsylvania or you are not. Payday lending is built on a parasitic business model, feeding off of the struggles of someone waiting for another check, and the only way these companies would be OK with sets of amendments is if that fundamental reality was not changed.

Philly’s State Senators have to keep this simple and stand against legalizing loans at annual interest rates of 300 percent. If these Senators represent you, please contact them, and let them know that Philly does not need the loan sharks. There is still time for these Senators to be heroes in stopping this, rather than villains in letting them in the door. Contact them and let them know where you stand.

Hitting People When They Are Down: The Loan Sharks Are On Their Way Back To Pennsylvania

It has been a bad year or two for vulnerable Pennsylvanians. From school funding cuts, to the apparent elimination of very basic, humane general assistance, to slashes to higher education and the refusal to properly fund public transit, piece after piece of our state's basic social compact is methodically being cut away. The “Commonwealth of Pennsylvania” has rarely sounded like a more misplaced name.

And yet, to make matters worse, in a morbid move that feels like a gilded-age pincer attack, Pennsylvania may take it one step further. Because right as the same time as Pennsylvania is producing ever more struggling people, the state is poised to invite in the private industries that profit by... ripping off struggling people. First up on the list, fresh off of passage in the State House, are everyone's favorite loan sharks: payday lenders.

And, for those us in the City of Brotherly Love, if that wasn't bad enough, a number of Philly's own legislators appear poised to be help make it happen.

The backstory is that, despite being illegal, payday lenders once operated widely in Pennsylvania. But, through private lawsuits, through the closing of loopholes and through other government action, payday lenders and their illegally high interest rates were booted out of the state. What was long illegal stayed illegal. The good guys won. The storefronts closed. Less vulnerable people were hurt.

Let there be no question: Payday lending is a horrible thing. It is nothing more than credit heroin, with loans made at annual interest rates of over 300%. It is pitched to desperate people, with the express desire to get them hooked, so that every two weeks they have to return to the well, being forced to take out a new loan just to fill the budget gap caused by the first one.

So how, in this very moment of economic calamity, austerity and publicly-inflicted misery, did payday lenders set themselves up for this return? I will give you one guess:

One fast-tracked proposal would bring back the controversial practice of payday lending to stores in neighborhoods, strip malls, even hospitals.

The measure passed the House on a 102-90 vote Wednesday, after a veritable army of lobbyists for the short-term loan industry worked Capitol offices.

Among the firms represented: Cash America, one of the nation's largest payday lenders, which in this legislative session has reported spending $125,000 on lobbying in Harrisburg.

All those who selected “because they paid for it,” please collect your prizes on the way out.

As are so many horrible bills that target consumers, this one also has the Orwellian gift of being pitched as a consumer protection bill. Of course, if your bill is supposed to protect vulnerable consumers and it is opposed by, among other groups, the AARP, Community Legal Services, United Way, Pennsylvania's National Association of Consumer Advocates, the Pennsylvania AFL-CIO, The Reinvestment Fund, Regional Housing Legal Services, the Navy-Marine Corps Relief Society and on and on, you might have a clue that, in fact, the bill is not protecting consumers.

Instead, in order to give cover for this so-called consumer protection, and so that the bill's sponsors can pretend to blur reality, the industry funded and founded a group, named the  “Consumer Rights Coalition.” This group, however, is actually “a payday lobby group that’s donned a name intended to create the illusion that this product has grassroots consumer support when it doesn’t.” Of course it is. It was founded by the executive leadership of Cash America, the internet payday lender, and leading beneficiary of the bill. That's pretty close to the extent of who supports this: rich loan sharks, their front group, and the politicians who enable them.  

Which brings us to where we are now. The bill just barely passed the House of Representatives, with a number of Republicans crossing over to vote against it.  Sadly, helping pass this in the House were, among other people, three State Reps from Philly: Keller, Sabatina and Taylor. (Fighting the good fight, and helping lead a charge that almost defeated the bill was State Rep. Cherelle Parker.)

Now, the bill is before the Senate and it is time for our Philly-based State Senators to state clearly that they oppose legalizing loan sharking and stand with their constituents, not the army of payday lenders and their lobbyists that are currently encircling Harrisburg. Our Philly-based Senators are:

Anthony Williams
Leanna Washington
Christina Tartaglione
Mike Stack
Shirley Kitchen
Larry Farnese
Vince Hughes

Each of these Senators represents many, many constituents that would be directly hurt by this bill. Most of them will likely do the right thing. But, it is really odd that a single one would even consider supporting it. I mean, if you were, for example, planning to run for Mayor, would you really be thinking about legalizing a business that openly targets poor people, while every single consumer advocacy group tells you not to? And yet, the rumblings are that someone like Senator Williams is wavering, at best.

Luckily, nothing is yet set in stone and there is still time for every single one of our Senators to do the right thing, join the fight, and stop this thing. Contact them, let them know where you stand, and ask them to do the same. And, if you hear back from them, let us all know.

Now, right as we slash social services, forcing people to become ever more vulnerable and desperate, is not the time to invite 21st century loan sharks back into Pennsylvania.

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