In what universe does a one percent check cashing fee exceed a $35 overdraft fee for overdrawing a checking account by $.01? (Photo: flickr.com)

In the 1960s and 1970s, many of America’s largest banks decided to go “where the money is” by pulling their branches out of the inner cities and focusing more on affluent areas. It may be sheer coincidence that infamous bank robber John Dillinger once gave that response to the question of why he robbed banks, but I’ll leave that for you to decide. Only in recent years has that trend begun to reverse.

What this exodus created was a growing population of “unbanked” individuals and families, people who depended upon everything from shoe boxes and coffee cans to store their money to check cashers for paycheck services and payday lenders for emergency cash. The traditional view society took of such people who depended upon check cashing and payday lending was that they were the “unsophisticated poor.” However, re-examination of this idea is advisable, as the truth may be that the unbanked are more knowledge about what the banking establishment is foisting upon consumers that we’re willing to admit.

Avoiding the World of High Fees

A recent New York Times article explores the phenomenon of why so many people are resorting to alternative measures rather than depending upon traditional checking accounts. While the journalist fails to produce any conclusive reasons, it doesn’t take much to read between the lines – the cracks in society’s pavement, if you will: overdraft fees of $35 per infraction for a checking account mistake are exorbitantly more expensive than a check casher’s fee of a few percentage points to cash a paycheck.

Jose Abreau Says “No”

A 37-year-old native of the Dominican Republic, Abreau denies the bank representatives who come to his New York coffee shop to recruit him into the world of traditional banking. He doesn’t see the point, as what money he earns beyond his immediate needs is sent to his family back home. He does this in spite of the fact that banks are credit unions are within easy reach. However, so are check cashing businesses.

A recent Pew poll indicates that 86 percent of licensed check cashers in Manhattan are located closer than four blocks from a bank or credit union. People like Jose Abreau actually walk past the banks and credit unions to get to the check cashing businesses and payday loan stores. Perhaps this is because many immigrants come from countries where friends or relatives lost money due to bank collapses or corruption (where there was no FDIC to step in and insure the deposits), but in reality there are a wide variety of reasons. Language barriers can exist, but community outreach groups are available to assist. Financial education is available for those who may not understand how traditional banking works. However, the way many banks treat consumers stands at the top of the list as to why someone would not want to rely upon the banking monolith.

Not So Unsophisticated, Are They?

Millions of Americans live from paycheck to paycheck. That’s a fact that the current recession has made painfully clear. Yet this does not mean that these consumers who are just making it are unsophisticated. On the contrary, they’re educated enough to see that if a surprise expense or miscalculation dips their checking balance into the red, the resulting overdraft fees are unconscionable. Rather than having such an organization hold their money hostage, many people feel more comfortable with check cashing, where all the money they have is right there in their hands. Check cashing fees are much lower than any overdraft fee or minimum balance penalty.

How Much Lower?

Consider this. Many banks extend customers the “courtesy” to use ATM machines to withdraw more than they actually have in their accounts. This comes with a heavy – and damningly silent – penalty. We’re talking 200 percent on overdraft fees or more. How is this no legal fraud? How can this be advertised as a courtesy? Is it any wonder that check cashing customers don’t want anything to do with such institutional treachery? If banks would charge no overdraft fees and simply not allow purchases that would create overdraft to go through, they’d probably draw more of a customer base. But banks depend upon overdraft fees for much of their operating profit, so it’s clear that they have little incentive to stop.

Imagine this scenario if you don’t already understand just how disillusioned some are with banks. If a working poor family bounces a single check – let’s say it’s for a mere $3 – there’s an overdraft fee of $35 or more. That could be a weekend’s worth of food for hungry children, plus diapers and subway fare. If the family doesn’t keep their balance above a certain figure, they could be paying even more. Yes, if overdraft fee policies were different, I’d be telling a different tale. And some banks and credit unions do offer free checking. But not everyone meets the credit or documentation requirements, or their local bank many not offer the service. For the transportationally challenged, that means taking what’s closest to home.

What Carrot Could Banks Possibly Offer?

Banks are crying out for customers in this recession, aren’t they? What kinds of incentives could they offer to make people want to use their services? Aside from being able to receive direct deposit or develop a credit history, it seems that people would like to earn a decent amount on their money. But savings accounts that offer .0125 percent interest don’t cut the mustard, let alone the artificial buttery spread. It’s better than nothing, but not by much. Factor in the fees and penalties and traditional banking can feel as good as a sock in the eye.

Hiding from “The Man”

Those who avoid traditional bank accounts for the services of check cashers may be hiding, too. I mention this not to justify the practice, but it’s something of which we should be aware. Without a checking account, bill collections and courts have one less option for skimming cash in the event that the consumer owes money. Of course wage garnishment is still a possibility. And what about those people who avoid traditional banking because their income is under the table? Being able to cash in on certain welfare benefits is a powerful lure, which could explain why some consumers don’t feel the compulsion to put their money in the bank where it can be detected so easily.

Not Such a Rosy Picture for Most

One reader commented on the New York Times article in a manner both poetic and bitingly real:

O, these great unwashed masses, unwilling to strap themselves to our glorious consumer banking system where they can know the joys of ATM fees, NSF fees, account maintenance fees, account research fees, etc. , all while enriching themselves on the 1.8 percent interest rate! What is wrong with these people? Don’t they want to be part of the American Dream?

Avoiding traditional banking is second nature for many, but steering clear of it entirely can have its disadvantages. Check cashing is an attractive option for those who can ill-afford the predatory practice of overdraft fees. Unfortunately, that would include most people. Many who have money do not understand just how much the deck is stacked against those with so little. Bank presidents think in terms of profits; bank customers hope not to run afoul of bank policy, as they have become increasingly unprofitable for consumers with each passing year.

Have you had it up to here with your bank's overdraft protection schemes? You aren't alone, according to the Center for Responsible Lending. (Photo: flickr.com)

If you’re able to see past the shady origins and history of the Center for Responsible Lending, you’ll see that occasionally they do good work that benefits society. While they’re certainly no friend of the payday loans industry, I find that their recent report on the overdraft fees and overdraft protection rackets is worth noting for any financially conscious consumer. Personal Money Store wants you to be informed when it comes to your money, so take the CRL’s findings as a word of caution when it comes to the twisted world of overdraft fees and protection.

Major Overdraft Findings That Should Give You Pause

Overdraft fees and overdraft protection costs have skyrocketed in recent years. According to the CRL’s findings, there are three shocking points of which we should all be aware:

1. Overdraft occurs frequently. Over a 12-month period, the CRL found (based upon Federal Reserve data) that more than 50 million Americans overdrew their checking at least one time. Of those, more than half (27 million) had five or more.
2. How much operating income did overdraft feeds produce for banks and credit unions in 2008? Try $24 billion. Broken down, it’s been noted that a credit union could derive as much as 60 percent of their operating income from overdraft fees and overdraft protection.
3. Think overdraft is under control? Think again. From 2006 to 2008, the CRL found that banks and credit unions upped the penalty by 35 percent.

Were You Even Asked to Opt Into This?

For most people, the answer is no. When you sign up for a checking account at your bank or credit union of choice, you’re automatically enrolled in an overdraft program. And buried in the fine print of your contract is the overdraft fee schedule. Generally, transactions consumers don’t have the money to cover are automatically paid by the bank or credit union. What the consumer gets for the trouble is a penalty per transaction in the neighborhood of $34. Furthermore, banks and credit unions tend to charge an additional daily fee for as long as a consumer’s account balance remains overdrawn. Regardless of whether an account is overdrawn by $100 or $.01, fees can mount – and no bank or credit union I’m aware of works on a sliding scale. It’s all about flat fees that the consumer must pay. And CRL research indicates that for every $1 in overdraft protection credit extended to consumers using their debit cards, $2 in fees are assessed.

The Banks’ Defense

It’s all about protecting a consumer’s good name, they might say. By providing this “service” to customers, banks and credit unions claim they’re keeping people from bouncing checks. NSF fees from banks, bad check fees from merchants and (potentially) other late fees could amount to a person’s picture being hung on the wall in mug shot-like splendor.

Bouncing Checks Aren’t the Story, However

Debit card and ATM transactions are the big issue. The CRL finds that if banks and credit unions wanted to, they could simply decline transactions that would put consumers in the red. However, most do not do this. They pay for the transaction but “help” the consumer by severely penalizing them. While consumers should certainly be responsible with their money, digging unnecessarily deep holes for them to try to climb out of after they’ve already made mistakes is a questionable tactic on the public relations front. In the end, it comes across as a money grab.

The Reordering Transactions Shell Game

Did you know that banks and credit unions reserve the right to reorder your banking transactions from highest to lowest, even if the lesser transactions occurred first? This catches millions of consumers who gamble that a large expense won’t clear until after their paycheck is deposited. If you’ve ever done this (I know I have), know that you’re playing a losing game.

Automatically Dragged Over the Coals

This is what John and Jane Consumer typically get when they sign up for a standard checking account. Many aren’t even aware that cheaper options are available. Some banks may offer a cheaper, more formal line of overdraft credit, or even a link to a savings account in the case of overdraft. However, even these can be expensive. Payday loans, when used properly, can cost even less. Did you expect me to say otherwise?

A Terrible Trio for Consumers

Using FDIC data from 39 member banks, the CRL digs into just what the overdraft fee jungle means for consumers. They do this by addressing the three points raised above.

1. Overdraft Occurs Frequently

Of the 6.5 million accounts held in the FDIC sample, around one in four experienced at least one overdraft over the course of a year. One in seven experienced five or more. As mentioned earlier, this translates to about 51 million Americans stuck in the overdraft fee quagmire. Those with five or more instances are sinking beneath the muck. The CRL found that repeat offenders tended to be of lower income, single, non-Caucasian renters. Considering that the FDIC points to the 18 to 25 age group as being most likely to fall into the overdraft trap, it seems that more effective financial education is in order. Learning to control excessive impulse spending, balance the checkbook and consider options like payday loans in emergencies could help anyone.

2. Excessive Overdraft Fee Profits

Banks and credit unions are conveniently not obligated to report what they make on customers’ overdraft fees, but the FDIC did manage to compile from a sample of its member banks. They found that that around 69 percent of their service charge income came from NSF fees. Extrapolating the data, the CRL finds that this amounts to $34.3 billion in fees for 2008 alone for all service fees. Sixty-nine percent of that is $23.7 billion, a staggering sum that should be much lower. As banks, credit unions and even credit card companies are jacking up fees, that figure could be even larger in 2009.

3. Fees are Out of Control

As I was saying, overdraft fees are a source of concern for any consumer who depends upon the traditional banking industry to care for their money. As the collection has increased 35 percent from 2006 to 2008, the CRL wonders if there’s a ceiling. Organizations like the proposed Consumer Financial Protection Agency and the Credit Card Bill of Rights are designed to help make right what has gone so far wrong, but will they have the healthy canine teeth to tear away the sweet meat?

As mentioned, fees for individual overdraft transactions and days a balance is in the red are commonplace. A cup of coffee, a tank of gas and a few miscellaneous convenience store purchases can quickly and silently become hundreds of dollars in overdraft fee debt. The CRL finds that the monthly average for individual debt card usage is 17. More than a quarter of those are for less than $10.17 on average. Imagine the possibilities across the banking industry. Since this use has exceeded credit card use since 2005, it’s also no wonder that the credit card industry has sought myriad ways to charge their customers with fine print clauses.

Fruits, Vegetables and Overdraft Fees

That sounds like part of a balanced diet these days. The CRL frightens us all with the details of how Americans spend “about the same amount” on overdraft as they do on fruits and vegetables. As for grains and other essentials like postal stamps and books, overdraft fees are clearly in the lead, say the CRL. Considering how difficult financial matters are during the recession, is it any wonder that the CRL found that most consumers would prefer that a transaction be denied than to have to paid exorbitant $34-per-transaction overdraft fees?

How Can This Problem Be Fixed?

This is your checking account on overdraft protection. (Photo: http://tolweb.org/)

Beyond preparing consumers to make sound financial choices, the financial abuses inherent in the traditional banking system must be exorcized. The Federal Reserve is considering that very matter, as is Congress. Large-scale change is needed.

Prohibit Overdraft Fees on Debit Card and ATM Transactions

This exception would be a welcome aid. If a fee is absolutely necessary, then a bank should have to provide a more highly visible, real-time warning so that debit and ATM infractions don’t fly under the radar and destroy overtaxed consumers’ budgets. If warning sign appears, consumers would have the choice to back out of the transaction (if the merchant didn’t simply rule out that method of payment). Some banks and credit unions block such transactions completely. The CRL suggests that all should follow the practice.

Overdraft Fees Should Be Proportional

The CRL’s finding that the amount that banks pay out to merchants for consumer overdraft is about half of what they actually charge consumers for the “convenience” is another signal beacon that change is needed. Flat fee overdraft charges are unnecessary when compared with the actual cost of covering the overdraft to banks and credit unions. It is understandable that banks and credit unions have to think of profit margins, but the current overdraft fee system is tantamount to gross customer abuse. The CRL suggests that an overdraft line with a reasonable rate of interest would be easier for consumers to swallow. Then again, rather than dealing with revolving interest, why not use payday loans?

There Should Be a Limit

If a consumer dashes their checking upon the overdraft fee rocks, banks and credit unions should be required to offer an alternative product at lower cost. A consumer shouldn’t be allowed to rack up more than six overdraft fees per year, says the CRL. This is what’s called weaning traditional financial institutions from their habits of excessive profit. Getting by with a reasonable profit margin may mean fewer executive retreats to Cabo San Lucas, but it’s the right thing to do.

No Overdraft Protection Without an Opt-In

This is self-explanatory. No service or accompanying gross fees should be thrown at a consumer without their approval. The CRL found that around 90 percent wanted to be able to choose whether they would have overdraft protection or not, so banks and credit unions should listen. If not, they run the risk of losing even more customers to payday loans when financial calamity strikes. Banks and credit unions certainly have a larger war chest to draw from, but that doesn’t mean they shouldn’t try to be competitive.

Make Banks Toe the TILA. Payday Lenders Do!

The Truth in Lending Act requires that lenders disclose certain information to the public. It seems that information regarding the amount of money banks collect in overdraft fees should be included in the purge, much the same way payday loan companies make their APR known. Since overdraft protection is an act of extending credit to a consumer, banks and credit unions should be forced to clarify just what they’re charging customers. No bank or credit union should be exempt from the law.

There’s Nothing Up My Sleeve

The Consumer Financial Protection Agency is on its way. President Obama made a great deal of show about the related Credit Card Bill of Rights. It’s time for banks and credit unions to be made to tow the line. If you’ve even gone through the hassle of dealing with overdraft, you know that there has to be something better behind the curtain. In the case of payday lenders, there’s nothing “up the sleeve.” In a short term financial emergency, payday loans are up front about fees, which typically are much less expensive than falling back on overdraft protection. The consumer should have the power to choose what fits their financial circumstances best.

Related Video:

Destroying the payday loans industry creates problems and solves nothing. Balance is needed in legislation. (Photo: wikipedia.org)

Even if you’ve never been a customer of a payday loan business, you’ve likely seen or heard about the product. You probably also know that payday loan businesses are fairly easy to find in both the brick-and-mortar world and in cyberspace. With such a proliferation, it seems obvious that there is a demand for such consumer loans. Yet for a product that millions of consumers use each year, it’s interesting that the entirely legal payday loan industry has been affixed with such a negative reputation.

Throwing Stones

The most common allegation levied against the payday lending industry is that it constitutes predatory lending, exploiting helpless consumers with high rates and other loan shark tactics. On their behalf, those who offer payday loans assert that the rates charged are appropriate to protect against risk, yet much less damaging than what consumers can encounter in fees if they don’t pay their bills or have their utilities shut off. Unfortunately, there is relatively little objective analysis that looks beyond the rhetoric of both sides of the payday lending issue. Critics adopt what they consider to be a moral high ground where they use “payday loans” and “usury” in the same sentence, while lenders defend their practice by illustrating that customers are made aware of costs before a contract is signed and by claiming that current rates are necessary in light of operating costs.

Let’s Take a Balanced Look at the Stats, Shall We?

That’s exactly what Aaron Gold does in his New York University honors thesis “Payday Lending: Grounding the Policy Debate Through Economic Analysis.” His study compares some key metrics between payday lenders (five of the largest chains, representing 25 percent of U.S. stores) and a sampling of “traditional” lenders such as banks and credit unions. In a nutshell, Gold finds that high operating expense does seem to justify the cost of payday loans. While data supports the notion that payday lenders are more profitable than traditional lenders, their profits in relation to their “break even” point aren’t as outrageous as overheated critics claim.

The Social Forces behind Payday Lending

While people from all walks of life have had the occasion to use payday loan services, averages definitely point in the direction of an upper-middle to lower class demographic. Gold cites the M.S. Barr article “Banking the Poor” in the Yale Journal on Regulation. Barr suggests that an increasing number of Americans are “under-banked” (Barr, 2004, p. 2). “Real or perceived costs and fees of maintaining traditional banking services,” suggests Barr, are simply too much of a hurdle for scores of people to clear. Considering the shenanigans of financial institutions that steered America toward the current recession, such skepticism is no surprise. Douglas McGray writes in an article entitled “Check Cashers, Redeemed” that lower income consumers and (anecdotally) some segments of immigrant communities tend to disdain the system of traditional banking and credit. Furthermore, he alludes to public relations efforts made by payday lenders in their communities (such as employing local, multi-lingual people). Thus, payday loan stores serve as comfortable, convenient one-stop shopping for those in need of quick cash during an emergency.

Payday Loans Are For Consumers with Steady Income

It is simply untrue that payday loan companies prey upon people who don’t have the money to repay. Only those with a verified steady income are eligible, a safety measure for both the consumer and the lender. An analogy Huckstep uses in his important study “Payday Lending: Do Outrageous Prices Necessarily Mean Outrageous Profits?” is that payday loans are like a financial taxi: “Expensive for long trips, but perfectly viable for short distances” (Huckstep, 2007, p. 207). Used properly, payday loans can save consumers a great deal of money over more catastrophic alternatives. This is a fact that reputable payday lending businesses stress to consumers through their literature and service counseling.

But Are Payday Loans Too Expensive?

That’s what critics say, and the key defensive position has been that high risk justifies the price. Gold points to the 2005 FDIC study by Flannery and Samolyk “Payday Lending: Do the Costs Justify the Price?” in support of the defense, but Huckstep counters that “while loan losses may be high… that seems to be a trait of the lending industry generally, rather than a unique trait of payday lending institutions” (Huckstep, 2007, p. 230). Looking at said charge-off rates, Gold finds the ratios (dividing yearly charge-offs by the amount of originated loans during that period) between payday lenders and traditional lenders to be rather similar, and very much in keeping with overall Fed averages. In fact, the average for payday loan default is shown in Huckstep’s study to be below those of credit cards. This suggests that consumers are indeed able to handle their payday loans when compared with other kinds of consumer lending.

Do Payday Lenders Reap “Obscene” Profits?

Overall, multiple sources confirm the truth that payday lenders have enjoyed greater profits in recent years than traditional lenders based upon similar products. But Gold would have us understand that from 2006 to 2008, the profit margin above the “break even” point for the major payday loan companies decreased dramatically. There are numerous reasons for this, but Gold intimates that a lack of growth opportunities within the payday lending industry may have something to do with it. Whether this is because the industry has become overgrown and needs pruning or overzealous regulation has hamstrung businesses in too many states is debatable.

From the standpoint of the numbers, loan volume is considered to be the key to payday loan store profitability (rather than exorbitant rates). Growth and competition have a definite impact upon loan volume on a per store basis. Gold believes that consumers are attracted to payday loan locations primarily because of convenience, so expansion of store locations and operating hours are necessary to compete. However, venturing beyond a saturation point may actually decrease profits.

Good Return on Assets and Equity

Payday loan business, according to Gold’s findings, produce a greater return on assets (ROA; the ratio of operating income to average assets), which indicates that they are more efficient at what they do than banks and credit unions that offer similar products. Considering that payday loan companies tend to have a relatively small number of physical assets when compared with big traditional lenders, the payday lenders experience much less loan turnover and require much less operating capital in order to produce positive returns.

Does this mean that shareholders of payday loan companies are making a killing? Relative to traditional lenders, the equity tale of the tape says no. Gold finds that from 2004 through 2006, payday loans originators and traditional lenders were basically dead even. By 2008, however, the subprime mortgage crisis sent traditional lenders plummeting. Payday lenders readily took up the slack of consumer demand and posted a much more positive return on equity.

Scale Down, Payday Lenders?

Gold appears to lean toward the idea that if “store density is a function of price, then a reduction in density would increase loan volume and profit at remaining stores.” In such an instance, payday lenders could conceivably charge less and still collect a decent profit. A reduction in competition would then help consumers.

Payday loans could continue to satisfy consumer demand, provided the constant attack mentality of legislators (who no doubt receive sizable campaign contributions from traditional lenders). Some regulation is beneficial (since there are lenders with room in their profit margins to decrease price), but a 50 to 75 percent reduction in APR will only serve to put legal businesses down and increase unemployment. Cooler heads must prevail. As Gold puts it,

For real progress to be made toward finding an equilibrium that works for all involved in the payday debate, interested parties need to move away from inflammatory rhetoric and legislation that views the industry in binary terms. They must move toward defining acceptable interest rates and profit margins and take cautioned steps to satisfy the credit demand in an economically sustainable way.

Follow the Numbers

In America’s recessionary economy, sustainability is a highly desirable goal. Payday loans are here to stay. When will legislators admit that and work toward economic harmony?

If you could use Payday Loans, please apply here

Banks get rich by making me poor

I just can’t stop kicking myself. First, I got slammed with $105 in bank overdraft fees. I am still recovering from it. Then, I came across this story in The Huffington Post that says banks made $24 billion from overdraft fees last year. That’s Billion. With a B. In one year. I feel like such a sucker.

I especially feel like a sucker because I knew all about payday loans. I know how much they cost. I know how quickly they are completed. And now I know that I could have saved a bunch of money if I’d gotten a payday loan in time.

Reputation versus reality

Payday loans have gotten a bad rap. A small, loud group of angry people have convinced a lot of people, including my dad, that payday loans, or unsecured loans or cash advances — whatever you want to call them — are bad. The people who are angry about payday loans are the ones who used them irresponsibly and got hit with late fees.

However, those of us in the know realize that getting a payday loan on purpose and paying it back on time is far less expensive than accidentally overdrawing your bank account. My bank charges $35 for the first transaction that puts me at a negative balance. After that, it charges another $35 for each transaction after that until my account is returned to a positive balance. It doesn’t matter if it’s $5 or 5 cents, I get charged $35. That’s how I ended up losing $105 because I made three small purchases after an automatic payment went through and I didn’t realize my account was drained.

Where I live, the average fee for a $100 payday loan is $15. That’s a one-time fee. It doesn’t matter how many purchases I make with that $100. I could have gotten a $200 payday loan , and it would have cost me less than one bank overdraft charge.

Don’t fall victim to your bank

So everyone is going after the payday loan industry because lenders charge fees if you don’t pay back your loan. But where is the outrage about the ridiculous amount banks charge if you overdraw your account by even a dollar? Given the fact that the banks made $24 billion from overdraft fees in 2008, and they are on target to make $27 billion this year, people are starting to take notice.

The Huffington Post writes that “some banks post debits from the highest amount to the lowest, rather than chronologically, so a $4 purchase at 10 a.m. at Starbucks is posted to the account after a $68 dinner bill that created a negative balance.” That means the customer should have only been charged once, but she or he was charged twice. How messed up is that?

Don’t trust me, trust the numbers

You might still be thinking “I’m not sure if I want to do this.” Well, there is one sure way to figure out whether you are doing the right thing: Do the math. You don’t have to accept the terms of your payday loan until after you already know what your lender’s fees will be.

Simply calculate which will be higher: the payday loan fee or the overdraft charges. Don’t forget to take into account that you’ll get charged the overdraft fee on every purchase you make. You will only be charged your payday loan fee once.

Avoid overdraft charges. Apply for your payday loan HERE

Image from ggpht.com.

Unfortunately for “The Informant!” which was film critics’ favorite opening movie this weekend until now, “Cloudy with a Chance of Meatballs” reviews are in, and so far critics unanimously agree that it’s a great film. This animated film directed by Phil Lord and Chris Miller is sure to pull in some big bucks at the box office this weekend. I predict it will take over as number one in ticket sales, knocking Tyler’s Perry’s latest flick out of the top spot.

Last week “I Can Do Bad All By Myself” pulled in $23.4 million, and the next biggest earner was animated sci-fi flick “9,” which came in a distant second with  $10.7 million. “Inglourious Basterds” is still holding onto its spot in the top three with $6.1 million.  I guess not many people wanted to go to the movies last weekend. Too bad you can’t get a short term loan just for a movie ticket.

‘Cloudy with a Chance of Meatballs’ reviews

Alfonso Duralde from MSNBC says “Cloudy with a Chance of Meatballs” is “overstuffed with enough sight gags to delight children — if the young audience members at a recent advance screening are any indication — while throwing in healthy dollops of wordplay and absurdist humor to keep their adult chaperones entertained as well.” The sentiment that both children and adults will enjoy this movie was a popular one among reviewers.

Frank Lovece from Film Journal International was another one of the critics that pointed out its wide appeal for all ages. “This delectable animated feature, based on the famed children’s book, crackles with cleverness, dry wit, kinetic slapstick and absurd humor for all ages—and offers possibly the most dimensional 3D yet,” he wrote. He says the filmmakers did a good job of expanding on the children’s book series it was based on.

Don’t forget to include the economy

“Cloudy with a Chance of Meatballs” brings modern, current issues to the forefront of the film, as the story is about an inventor who saves the day during a bad recession by inventing clouds that rain food. Nick Schager from Time Out New York points out that the visuals parody disaster films. Comparing “Cloudy with a Chance of Meatballs” to a popular 3-D animated film, Schager wrote “It may not have the heart or subtle artistry of Up, but then again, Pixar’s 3-D outing didn’t feature a mustache-tearing monkey, a manchild encased in a giant cooked chicken, or a beefy, bounding cop voiced by Mr. T.”

Chris Nashawaty from Entertainment Weekly wasn’t as huge a fan of this film as many other critics. In his “Cloudy with a Chance of Meatballs” review he writes “even at a svelte 81 minutes, this meal drags on too long.” However, overall he gave the film a good review and said it “goes down easy enough” and raves about Mr. T’s performance. Get ready for “Cloudy with a Chance of Meatballs” to take over at the box office and bring in the big bucks.

Short Term Loans Online

We are going to share a real life story of a family who avoided additional hardship after being taken advantage of by a bank, thanks to short  term loans online. Of course we have to change the names of the people who benefited from the online short term loans for privacy reasons. Please read the following story of the Joneses and their experience with big banks and installment loans for people with bad credit.

Economic hardships can be prevented with short term loans

The “Jones Family” got more than one short term loan online in order to squeak by in this harsh economy. Mr. Jones was having trouble making sure that he kept track of all the debit card transactions between himself and his wife. Add automatic deductions to the account and internet purchases and Mr. Jones had a receipt for disaster.

Big bank fees cause big shock to the budget

Mr. Jones had no idea that the big bad bank was going to reorder debits and other deductions to the account in a very strange fashion. After planning a trip for his family for several months, everything seemed to be in place. The Jones family had a great time and had not a clue what was about to happen to them financially. Their budget was going to undergo a radical change without their knowledge or permission.

Fun vacation ruined by bank fees

After a great week of vacation, Mr. Jones finally was able to get online and check the family bank account. Shockingly the bank was claiming they were overdrafted by almost $1,000 dollars. Mr. Jones had set up automatic overdraft protection with a secured savings account credit card. There should not have been 10 overdraft fees charged to the account. It was going to take more than one short term loan online to get the Jones out of this budget crisis.

Read the bank’s fine print

Upon close examination of the banking record, it was revealed that there should have been enough cash in the secured credit card account to cover the overdrafts. There was approximately 15 debit charges to the account for various vacation expenses. There was the addition of an early debit for auto insurance to the account for approximately $200. This brings us to the scandalous part of the story.

Bank reordered debits to create unnecessary overdrafts

The bank reordered all the small debits for the vacation that were in “pending” status and put the larger insurance debit first ahead of the others. This was strange since the insurance debit actually accured after all the small debits in the account. Interestingly enough, the bank reordered the debits to create 10 overdrafts instead of just one. So, to borrow about $100 or so, the bank charged Mr. Jones $350. To say the least, the Jones were outraged.

Overdraft protection ignored by bank

It is bad enough when the bank did not take the money out of the overdraft protection account to cover the insurance payment, but to reorder all the debits for the vacation in order to profit to the tune of $350, that is simply highway robbery. The Jones were not only shocked but extremely upset. Being that the bank would not have any mercy on the Jones, they were forced to obtain short term loans online to make ends-meat while they paid off this outrageous debt.

Banks routinely target families

This is a common tragedy in the United States today. Big banks and financial institutions are taking advantage of working families. They pay the media big bucks to villainize short term loans online but they charge people in excess of 30,000% APR and call it a fee. Short term loans online are definitely a far cheaper alternative than overdraft fees.

Learn from the Jones Family mistakes

If you are like the Joneses you may want to keep better track of your online debit transactions and possibly get a short term loan online before you go on your vacation and pay for everything with cash or at least make sure you have extra money in your bank account. That would have saved the Joneses several hundred dollars and prevented massive headache and anxiety.

Get Your Short Term Loan Online Now!

If you don’t need a short term loan online today you may need one in the future. Please save this page in your bookmarks to come back later. If you need a down payment assistance loan to purchase a vehicle, you should check out VehicleMicroFinancing.com.

According to the blog Dollars and Sense, Bank of America has wronged America once more. Perhaps a lineup change is needed. B of A hasn’t been able to hit its way out of a paper bag lately. They’re shelling out multimillions for sports marketing, so their employees must all still have jobs, right? Wrong. Plus, Kenneth Lewis’ black hole is now preying upon the “unbanked” and others who depend upon cash advance loans at times.

The BoA branch in the Dollars and Sense author’s part of town is engaging in open class warfare. The elegant, executive-chic area for big-account investors is conveniently located at street level. If you’re a run-of-the-mill customer, you have to go down a flight of stairs and into a “dingy and low-ceilinged space reminiscent of a welfare office.”

Wait… it gets MUCH better

The author, who is not a Bank of America account holder, went into the nether-regions to cash his paycheck. Despite the fact that the check drew upon a Bank of America account and was made out to the author, the bank required him to pay a $6 fee. To make matters worse, he was required to leave them with a fingerprint – “for security.”

They already charge $3 for out-of-network ATM users. While I don’t agree with it, I can see how they might justify that.

How Bank of American and other megalithic banks can be allowed to nickel-and-dime anyone anymore is beyond me. Alternatives exist. Bank of America is being sued and is losing, all because of their practices. With so many people locked out of mainstream banking and big banks reeling during these difficult economic times, you’d think they’d work a little bit harder to draw customers.

Related Videos:

Benjamin Weiser of the New York Times proves beyond a shadow of a doubt that even large organizations fall for those fly-by-night Internet scams and need quick loans to dig their way out. But, come on, seriously? You were taken in by a Nigerian con artist, Citibank?

That’s right. A con artist by the name of Paul Gabriel Amos worked with a team to create documents that fooled Citibank into wiring them money in transactions totaling about $27 million. The money came from a Citibank account in New York held by the National Bank of Ethiopia. The con artists posed as Ethiopian bank officials and approved the transactions. They could quickly get loans from the bamboozled financial megalith that never required them to repay.

Not-as-famous Amos has been arrested

He was charged with conspiracy to commit bank and wire fraud. If the Nigerian scammer is convicted, he could spend 30 years in prison.

According to Weiser, the prosecutors traced the scheme back to September of 2008, when Citibank received documents instructing them to accept instructions by fax from the Ethiopian bank. Included was a list of officials who would confirm the requested transactions (each of them a member of the con team, of course). The signatures of the officials on these documents even appeared to match those in Citibank’s records, so it was all accepted.

In October, Citibank received the faxed requests for money to be wired, and it transferred $27 million to accounts in Japan, South Korea, Australia, China, Cyprus and the United States. After the ruse was discovered, Citibank credited all lost funds. However, the damage to the bank’s already teetering credibility had long since been done. Now, with banks like Citibank nationwide crying to the government for quick loans to help them remain solvent, it makes you wonder why President Obama and his team continue to put up with bank leadership that fall for schemes like this. If it’s because the verification process itself is flawed, then FIX IT!

Related articles

• Citibank Sends Nigerian Scammer $27 Million [Whoops] (consumerist.com)
• DOJ: Nigerian Scammed Citibank Out of $27 Million (gothamist.com)
• 419 scammer impersonates the nation of Ethiopia, takes $27 million from Citibank (boingboing.net)

When you need a little bit of extra cash, there are few options as fast, convenient and discreet as payday loans. Yet during tax time, the eyes of some consumers may be captured by the tax refund loan ads of big-box tax preparation services like H & R Block and others. However, tax refund loans do consumers an expensive disservice. This is the focus of a recent article by personal finance author Thursday Bram. She writes for the finance blog Investopedia that tax refund loans are products that should be handled with extreme caution – if they must be handled at all.

Payday loans are cheaper and much more flexible. Why waste money? Pay a flat fee of $15 to $30 per $100 loaned and be done with it. They are not difficult to pay on time, and numerous studies show that as high as 90 percent of customers do pay off their cash advance on time.

Tax refund loan numbers not in your favor

Bram shows that according to National Consumer Law Center research, 12 million taxpayers took tax refund loans in 2004, which is a staggering figure. Imagine how much money they could have saved if they’d explored their options more fully. Sure, it seems easy. The tax preparer offers an advance payout that’s available immediately. How convenient; no need to wait for the IRS to get around to your return and either mail or wire the funds. Once fees for the service are factored in, however, the tax preparer takes a large part of the person’s tax refund.

Bram suggests some alternatives, such as adjusting your W-4 with your employer to reduce withholdings. Cash Advance Mojo suggests something along the lines of an online payday loan if waiting for adjustments isn’t an option.

Of course tax refund loans are a good deal for the preparers. Otherwise, they would not be pushing them to the public this time of year. For one thing, since the loan cannot be more than what the consumer would receive in their refund, the odds that the tax refund loan will be repaid on time is extremely high. If the preparer files all paperwork properly (which big-box tax preparation companies tend to guarantee), how can they lose?

The IRS has tried to crack back tax refund loans

Have I got a tax refund loan to sell you...

They have tried, but nothing has stuck. But the law hasn’t ignored tax refund loans by any means. In 2002, H&R Block settled with the New York City Department of Consumer Affairs over these predatory loans. In 2006, the company went to court again, this time with the State of California.

Bram brings up another troubling ethical issue with these loans: tax preparers can “inflate expected tax returns to improve their profits. While this procedure is unethical, the gamble can sometimes be worthwhile. These tax preparers essentially bet that the IRS will not catch the changes made to their clients’ tax returns and charge higher fees to make a profit.”

Tax refund loans – steal from you, lie to the IRS

Something new is coming. Bram writes that the IRS will roll out the Customer Account Data Engine (CADE) by 2012. Among other things, this can process a consumer’s return within 24 hours and issue refunds within three days. This should effectively eliminate the need for tax refund loans. Thus, if a consumer is in a tough place financially around tax time, they won’t have to wait for any refund money. However, at other times of the year, the need for emergency cash beyond what the budget covers can be met with payday loans.

If you need assistance with tax trouble click tax resolution/settlement.

We, the people, can actually fight it off, by NOT Clamping Down

The thing is that when it comes to recessions, there is always one thing that could actually help, and it is universally the thing that suffers the most, and that is consumer spending. What we mean is that during periods of economic recession, consumer spending takes a dip because of a lack of consumer confidence, and the use of payday loans usually climbs a bit. Granted, if you don’t spend because you’ve lost your job and you need to save money, then in that case you absolutely shouldn’t be spending on anything. However, the retail and services industry is one of the largest in America, and those jobs and income depend on people spending. If the purchasing stops, the economy slows even more. If you, the consumer, goes out and spends on consumer goods, the benefits are that the stores stay open and can make money and pay their employees, and the company doesn’t go under, and those people in turn can purchase goods and pay taxes, keeping the economy going.

Spending, not saving, is what beats Depressions – Get the Economy moving again

The second emergency cash infusion can be a good thing – it may not necessarily be great, but it can really work. Now, our economy is hugely dependent on credit. People use it to buy houses, cars, use credit cards, and get educations. When these funds aren’t available, then the following consequences arise: Homes are devalued, and nobody buys or builds houses anymore. Construction workers are out of a job, so are all construction specialists like plumbers and electricians, so are millwrights who make the lumber to build, and so are the loggers who procure the wood. The auto industry suffers further and further losses and they need cash, wrecking the economy of the upper Midwest, and the risk of not being able to educate the American workforce and public? That’s perhaps one of the worst risks that face us. If the government bailout can work for the American people by getting the spending going again, then money will start rolling in and the big machine will come right back to life. That will get us back on track, and that is what almost always works in periods of recession: if the money starts rolling in again, then growth begins anew. Granted, some people won’t be able to afford to, and will have to turn to payday loans in order to even stay afloat, but spend normally this Christmas. You’ll be doing America a favor.

DISCOVERY!

NASA scientists have discovered gigantic underground reservoirs of frozen water on Mars, away from its polar caps. This is yet another positive sign that life may be – and has been – sustainable on the red planet.

Scientists theorize that the frozen water deposits are remnants of a Martian ice age that dates back at least one million years. Because water is a building block for life, the frozen reservoirs are an encouraging sign of extraterrestrial life.

Lots and lots of ice

Radar from the Mars Reconnaissance Orbiter revealed that the huge glaciers are one half-mile thick beneath Mars’ layers of rock and debris. One glacier appears to be three times the size of Los Angeles, California.

The buried glaciers are located in the Hellas Basin region of Mars’ southern hemisphere, and scientists predict that even larger frozen water reservoirs may exist in Mars’ northern hemisphere.

According to University of Texas at Austin geophysicist Jack Holt:

All together, these glaciers almost certainly represent the largest reservoir of water ice on Mars that’s not in the polar caps … In addition to their scientific value, they could be a source of water to support future exploration of Mars.

Maybe payday loans companies can relocate

My friends, you are interested in the future, for that is where we are going to spend the rest of our lives. I, the Amazing CashAdvanceMojo, predict that customers of such convenient short-term loan products as faxless payday loans hunger for the freedom to choose. Once government takes that choice from you, your budget becomes more vulnerable during times of crisis. Emergency expenses that simply cannot wait bite at your ankles like a peeved pekingese.

With the potential for life on Mars, it is now time. Board craft worthy of sailing the stars and depart. Create a society where the people choose their own destinies, not government. If you need emergency money to cover small expenses, start a business that provides payday loans on the Martian world. Zoom a little zoom in a rocket ship, and see the second story for more on this exciting discovery on Mars!

That amounts to a profit of $1.08 for every $100 loaned

Does it seem to you that payday loans establishments will be able to pay their leases, staff or tiny fragments of their electric bills with that small amount of profit from their services? It’ll never happen.

Yet Ohio Gov. Ted Strickland signed House Bill 545 on June 2, 2008

This established strict regulations for payday loans businesses in Ohio. In addition to capping the annual interest rate at 28 percent, the bill set a $500 borrowing limit for consumers and restricted borrowers to four loans per year. It also extended loan terms to 31 days from 14 days.

HB 545 went to a citizens’ vote. It was approved during the November 4 election, and will go into effect by the end of November. Strickland had this to say about the legislation:

The bipartisan legislation takes a major step toward protecting Ohio consumers who are already struggling with debt by strictly regulating payday lenders and lowering the maximum interest rate for short-term loans.

Yet it’s OK that

Apparently, select Ohio banks and credit unions have been offering these loans under other state lending statutes that allow them to charge interest and fees that add up to triple-digit annual interest rates.

Here again, the concept of an annual percentage rate shouldn’t apply. Now under HB 545, we’re talking about 31-day loans, not annual loans. This applies to payday loans from a traditional short-term consumer lending organization, a bank or a credit union.

If banks and credit unions can do it, so should the smaller lenders

Are they afraid of competition? Perhaps they are. But the banks also know that offering unsecured short-term loans at 28 percent APR isn’t a sustainable model. It will lead their clientele swiftly into the arms of overdraft protection when emergency expenses pop up. As has been documented in places like this and many others, overdraft protection is a much more expensive proposition.

In the meantime…

While the banks are sopping the biscuit, many short-term lenders have begun closing their stores and leaving Ohio. Some are seeking licenses under the Ohio Small Loan Act (see http://www.ece.umd.edu/MEMS/projects/fib-pdf/pdf/doc/ohio-state-legistration-voting-on-pay-day-loans.html) and the Ohio Mortgage Loan Act (see http://www.com.state.oh.us/dfi/pub/03-06%20CF%20Apps/SL/Small%20Loan%20Codebook%205-6-05_retitled_.pdf) that allows them to charge APRs that can reach 223 percent on a two-week $200 loan. That proves to be sufficiently profitable for the lender and easier to pay off for customers.

Because those acts are on the books in Ohio, it is unlikely banks will offer short-term consumer loans at interest rates close to what consumer advocates had envisioned when HB 545 was proposed, said Marc Kilmer, a policy analyst at the Buckeye Institute for Public Policy Solutions. They are critical of the bill.

Also in the meantime, Gov. Strickland says no to short-term consumer lending, but apparently has little problem with his employees who engage in pedophilia:

Payday loans are in demand and beneficial

In the study “An Experimental Analysis of the Demand for Payday Loans” by collegiate professors and researchers Bart J. Wilson, David W. Findlay, James W. Meehan, Jr., Charissa P. Wellford, and Karl Schurter, the researchers conducted a laboratory experiment to examine the extent to which the existence and use of payday loans affects individuals’ welfare in an economic environment in which individuals with limited income and financial resources encounter uncertain expenditures. (p. 14)

After analyzing the pros and cons of research that has been compiled over the past 10 years regarding payday loans, they conclude on p. 33 as follows:

We found that the majority of subjects in our experiment benefited from the existence of and their subsequent use of payday loans.

Further studies like those by Dartmouth economics professor Johnathan Zinman suggest that the absence of payday loans companies from Oregon has a negative correlation with the overall financial health of citizens. Studies regarding this useful short-term consumer loan product are appearing more frequently as we come to understand that offering consumers choice when it comes to money is beneficial.

Payday loans are predatory? Thats what the opposition would like you to think.

The war over payday loans continues in Arizona. Last week voters rejected Proposition 200, a ballot initiative financed and written by the loan companies to allow them to continue to charge their current interest rates on small loans.

Those who voted against proposition 200 claim that payday loan stores take advantage of and prey upon the poor.

What? “Prey upon the poor”?

This isn’t the animal kingdom, these brick and mortar stores are not preying on anyone, but they will be praying to stay in business if they can’t persuade lawmakers to ignore the voter’s wishes which was counted 60% to 40%.

Propaganda is to Blame

Much of the propaganda against the loan companies comes with talk of the payday lenders interest rates on the short term loans they give out. Even though, by law they can’t charge more $17.65 for a $100 loan, the opposition advertises the interest rate in terms of APR, so you would have to literally default on your two week payday loan for an entire year to accrue the APR interest rates that the opposition uses in their campaign against the small loan establishment.

Unfortunately, many voters who have no experience with payday loans are easily swayed by these twisted truths. If lawmakers pass the new new initiative their will be a 36% interest rate cap which means lenders will only be able to make $1.36 in revenue for every $100 they loan out. This will drive them out of business overnight.

Preying on the Poor?

As for preying on the poor, this is a shot below the belt by the uninformed and uneducated opposition. You cannot qualify for a payday loan, unless you have proof of income. In fact the average consumer who takes out payday loans makes between 30K and 40k a year.

A closer look at the truth!

As for being predatory, Payday loans don’t pounce upon you while you are sleeping nor do they lie in wait in unsuspecting places to devour your financial resources. There is no element of surprise here. When it comes to payday loans the consumer is not under attack. They have to initiate the search for there payday loan source, read the contract and sign it themselves. It is a service that is provided with terms and conditions that consumers can simply say “YES” or “NO” to. No physical force, no hypnosis, no telepathic mind control, or anything of else of the likes. Just a simple choice.

This kind of opposition is only opposing the freedoms that Americans have to decide for themselves. The only predator here, is the opposition against the payday loan companies.

If you want a payday loan, great! If not, fine. I couldn’t be simpler or more straight forward than that.

Soon after the New Jersey legislature passed a tough law aimed at controlling predatory lending, State Sens. John Adler (D., Camden) and Gerald Cardinale (R., Bergen) teamed up to sponsor a bill that weakened it.

Quoted With Edits From: Predatory lending is an issue in N.J. (The Philadelphia Inquirer)

Are lenders funneling in money to Adler's Campaign?

Ah, I see how it is. Adler and Cardinale came back to reality when they realized – after some reasonable discussion with lobbyists, which is the way things get done in America – that tighter controls would very likely restrict short term installment loans and other legitimate lenders that have a right to be in business. In much the same way, the people of New Jersey have every right to make their own financial decisions. They can choose how they deal with their money, and where they turn if they need a bit of reasonably priced assistance.

For Adler, however, it gets ugly. Since he’s running for Congress, his across-the-aisle Republican counterpart isn’t playing nice. Cardinale is claiming that Adler made the move to ease restrictions because installment loans lenders are funneling money into his campaign. How convenient: built-in attack ad opportunities!

The final version of the Adler-Cardinale bill does help consumers by reducing the amount charged by lenders. So long as the amount enables legitimate short term installment loans companies to stay in business, their right to profitable business remains intact and consumers’ right to the product when they want it or need it stands unsullied.

Installment loans offer consumers the freedom of choice when it comes to those emergency situations where the budget won’t stretch quite far enough to cover an unexpected expense. However, if we are to buy into Melissa Blasius’s of NBC 12 News report, we would assume that just because the bad credit installment loans industry has spent a large amount of money to support YES on 200 efforts means that they are self-serving and are not interested in real reform.

Blasius breaks out the common and oh-so-misinformed “400

PERCENT APR!” yawner, which has no bearing on payday loans, short term loans or anything related. Payday loans are TWO-WEEK loans, not annual loans. The percentage rate a consumer pays is 15 percent if their lender charges $15 per $100 loaned. The fixation on APR (annual percentage rate) that the media, banks and credit unions have is based originally upon the 1968 Truth in Lending Act, but now it’s merely a false rallying point.

Short term installment loans operate differently. As the name implies, they work on an installment basis, making repayment much easier. Plus, the consumer is the one who chooses their debit date.

Banks and credit unions want short term lenders put out of business because they pose too much competition for their big moneymaker: check overdraft protection fees. If you want to talk scary interest rates, take a gander at this report from the Center for American Progress. Americans are paying in excess of $17.5 billion per year. Ouch!

If you want to know the REAL deal about why you should vote YES on 200 in Arizona, check out this site. Then you’ll see why short term installment loans are useful, inexpensive compared to the options banks and credit unions would like you to have and essential if we are to maintain the consumer’s freedom of choice when it comes to how they will manage their finances.

Soon after the New Jersey legislature passed a tough law aimed at controlling predatory lending, State Sens. John Adler (D., Camden) and Gerald Cardinale (R., Bergen) teamed up to sponsor a bill that weakened it.

Your Payday Loans News Source Quoted With Edits From: Predatory lending is an issue in N.J.

The Saga Continues

No Good Deed goes unpunished

There has been a lot of information in the news lately regarding the payday loan industry and the accusation laid against them. The opponents of the industry have spread myths and false truths that have hurt the credibility of this industry as a legit and helpful resource that thousands of Americans use and take advantage of on a daily basis.

So vigilant are these opponents that they are now even beginning to lay false accusations against it’s defenders as well.

No Good Deed Goes Unpunished

This article is a perfect example enforcing the fact that imposing government regulation on the free enterprise establishment will only complicates matters.

State Senator John Adler and Gerald Cardinale teamed up to sponsor a bill that tweaked or weakened the NJ law against payday loans in order to let credit flow more easily to buyers.

No Good Deed Goes Unpunished

Now, these two men have been feeling the punch of negative publicity as opponents target them as supporters of predatory lending.

It really has got to stop! If credit can’t flow to buyers, we will only be speeding up the process of the economic down turn that we are now in. Collectively we need to be doing all that we can to jump start the economy not suppress it even if that means taking out payday loans so we can have extra cash.

The Buckeye Institute For Public Policy Solutions, a self-described “nonpartisan research and educational institute devoted to individual liberty, economic freedom, personal responsibility and limited government in Ohio” has weighed in on nine important myths about payday lending. May the analysis of Dr. Tom Lehman and Marc Kilmer make your ballot choice over Issue 5 easier to come by.

Here are the nine myths they tackle, with a little bit of commentary:

1. Payday lenders trap borrowers in a “cycle of debt” – To think clearly on this matter, it is necessary to understand that it is not a fast payday loan that cause borrowers’ financial problems. Almost universally, it is their pre-existing financial problems that cause them to take a loan. In many cases, that loan can help them get out of the hole they’re in.
2. Payday lenders charge 391% interest rates – This is a very common misconception. A Payday advance loan is a two-week loan with anywhere from a typical 15 to 30 percentage rate. 391 percent is an annual percentage rate, which works for mortgages and car loans, but payday advance loans are not annual loans.
3. Payday lenders make “obscene” profits – Lehman and Kilmer show that “as a percentage of revenues, profit margins for payday lending stores are lower than many other businesses, averaging between three and eight percent profitability.” Sure, that’s a profit, but it’s hardly obscene. Payday lenders are businesses, and in order to stay in business, there must be some profit.
4. Ohio politicians reformed, no banned, payday lending – What would you call capping rates at 28% APR? That’s profit of only $1.07 per $100 loans for a two-week loan. Does that sound like enough to support a business to you?
5. The average borrower takes out multiple loans – Evidence here is inconclusive. The methodological error critics generally seem to make is what Lehman and Kilmer call “ecological fallacy.” Essentially, “studies erroneously argue that growth in the number of payday loan lenders and/or growth in number of loans per storefront ipso facto causes loan customers to fall into a debt trap. There is no evidence to suggest this is the case.
6. Payday lending “strips” money from the community – There is an exchange of services going on here, people. There is a cost to the consumer, but they are receiving the benefit of the loan. No critic has stepped forward with a cost-benefit analysis that proves this claim.
7. Payday lenders “prey” on their borrowers – It should be clear that fast payday loan businesses are like any other legitimate business. They provide a product consumers freely buy. Moreover, in a voluntary economic transaction, “predator” and “prey” are not apt terms. Free will and choice are involved. If anything, with an average borrower default rate in the industry of around 20 percent, “predatory” borrowers tend to victimize lenders.
8. Payday lenders charge usurious rates, which are condemned in the Bible – America was founded on the separation of church and state, so let’s not play the pre-Revolutionary Church of England card here. Read Thomas Jefferson’s writings and you’ll find this fact to be unavoidable. Keep religion out of government and public policy. Besides, scriptures cited are always Old Testament, and with the coming of Jesus, didn’t he say “I am the end of the law.” Mosaic law is antiquated.
9. Consumers will be better off without payday loans – Solid evidence indicates people are worse off once loans are banned than before. See this Federal Reserve Bank study, paying particular attention to pages 20 and 26 re. North Carolina and Georgia and returned check rates.

Lehman and Kilmer’s report is clear, well-reasoned and well-supported. It’s the kind of thing Ohio voters truly need to make an informed decision about how they’ll vote on Issue 5 and the payday loan issue.

Congress will pass legislation next year that will make Wall Street financiers civilly liable for funding predatory and reckless mortgage loans, predicted Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

Your Instant Payday Loans News Source Quoted With Edits From: A bill to make Wall Street accountable for loans urged (Seattle Post-Intelligencer)

Assignee Liability and Predatory Lending

This article raises the issue regarding “Assignee liability”. Assignee liability is the term used to hold individuals responsible for holding or buying a predatory loan. This follows in the wake of this years financial crisis and if implemented will help prevent a further one from happening.

What is Predatory Lending and Predatory Loans?

Predatory Lending although not clearly defined by legal law, it’s practices are. Wikepedia best defines predatory lending as quoted below:

“the practice of a lender deceptively convincing borrowers to agree to unfair and abusive loan terms, or systematically violating those terms in ways that make it difficult for the borrower to defend against.”

Although, a legal agreement is formed and signed between two parties of a predatory loan, it’s the predatory lender’s deception in taking advantage of a less informed borrower that terms a loan as predatory.

Why the need for Assignee liability

Can Assignee Liability Tame the Bull? Or will everyone need Instant Payday Loans?

The financial crisis that we are currently enduring was largely caused in part by Wall Street’s aggressive marketing of mortgage backed securities. These securities as the article states, were each made up of thousands of high risk sub prime and nontraditional loans. This ultimately led to the expansion of high risk predatory lending followed by the pandemic of foreclosure and defaulted loans that we have seen sweep the country.

Assignee liability will bring accountability to everyone including wall street in regards to high risk predatory loans.

What next and what to watch for…

If there is anything good that has come out of this crisis, assignee liability seems to be one of them. Until the laws are properly defined and the written we won’t be able to see just how much will be affected by it’s implementation. We want to be careful as not to invite anymore government regulation into our life as necessary yet ensure our own protection from such practices as well.

This article was brought to you by your Instant Payday Loans News Source

If you saw 60 minutes last week you might have been just as surprised as I was to learn that Treasury Secretary Henry Paulson had ordered Bank of America and several other banks to take quick payday loans even though Bank of America said that they did not need the money. I find two problems with this which are equally troubling.

Is our government becoming socialistic?

First, since when was the government able to order free enterprise working within the bounds of the law to sell out preferred shares to the government? This sounds a little like socialism to me.

Using taxpayer dollars?

Secondly, although it’s no surprise, the billions of dollars used for these seemingly socialistic transactions are made possible by you and me, the taxpayer. Nice of Uncle Sam to force spending even when Bank of America said they didn’t need the government’s money.

Although forced upon them, Ken Lewis, CEO of BOA says that they will use the money to increase profits and will most likely pay off the loan within 4-5 years.  Wouldn’t it be nice if we could pay off our quick payday loans within 4-5 years?

Hypocrites?

What’s equally awkward, or shall we say hypocritical, is that our government’s politicians have had the gall to impose regulations and bans on the Payday Loan industry for its supposedly predatory lending practices.

Correct me if I am wrong but, a consumer has never been forced to take quick payday loans even when they said they didn’t need the money.

Forty-eight New Jersey property owners have lost more than $3 million in home equity through “foreclosure rescue” schemes operated by Vest Financial and JP Global Property Management Inc., according to civil lawsuits filed by the state Attorney General’s office. The…

Your Payday Loans News Source Quoted With Edits From: State accuses firms of running predatory ‘foreclosure rescue’ schemes (The Star-Ledger)

Predatory Lending Strikes Again

New Jersey Foreclosures

Predatory lending strikes again as forty eight New Jersey property owners loose over 3 million dollars in foreclosure rescue schemes.

This comes to light during a long string of predatory lending cases across the nation. Most influenced by Wall Streets over marketing of mortgage securities the last several years.

The Federal Bailout Bill provided some relief at the American taxpayers expense which has only fueled intolerance for such activities.

The thirty seven mortgage loan providers and mortgage industry employees, lawyers and others found in violation of the states Consumer Fraud Act will most likely suffer some steep penalties and fines. The state is already seeking restitution for the property owners as well as penalties and permanent bans to keep them from offering similar schemes to others.

Long Term Repercussions

The banks bad dealings have left the taxpayer with the tab. Payday Loans Anyone?

Estimating the total damage to the economy from the onslaught of these predators is difficult to say the least. We are only beginning to see the tip of the ice berg as there were trillions of dollars invested in bad loans and mortgage securities.

Credit swaps as they were called were sold as a kind of mortgage insurance although they didn’t require the banks to set aside funds in case they were called due. With the failing economy these securities flooded the banks causing many to fail. Since a large percentage of these are still out there, it’s hard to determine the final cost these securities will have on the country.

Who’s Paying the bills?

Unfortunately, the biggest players of these bad debts were the banks and because the nation could not afford to let some of the biggest banks like AIG fail, the federal government put together the enormous $750 plus billion dollar bailout bill mentioned above. A tab the American taxpayers have to pay for. If you are in need or your financial bailout, you can apply for payday loans to help keep you from going into foreclosure.