A number of Chicago-based banks, including ABC Bank and Urban Partnership Bank, are seeking ways to direct the unbanked away from predatory small dollar loans. "I think we have questions about the responsibility about some of the [small-dollar loan] products,” said Levoi Brown, chief banking officer with Urban Partnership Bank. “A lot of these people are already in debt. So what you are doing is continuing to feed that cycle.” ABC Bank offers Ready Cash, a small-dollar loan product for the unbanked. Reginald Little, loan officer at ABC, said the product offers a much better interest rate and repayment than other nonbank firms. Mr. Little picked up an application form from a local payday loan lender and pointed at the 403 percentage rate. “Don’t you think that’s a bit abusive?”
A new video documents the impact of Virginia Community Capital's Pathfinder Program on the Appalachian town of Glade Spring. The program started in 2010 when Virginia Community Capital convened a variety of national and regional stakeholders to discuss solutions for rural Virginia's economic hardships. With funding from the DHCD, the Pathfinder Program injected much-needed capital into the towns of Glade Spring and Onancock. Dirk Moore of the Glade Spring Planning Commission remarked on the progress:"When I think about the past, I remember boarded-up windows, people talking about a 'ghost town.' Today, the town features bustling shops, including a new outfitters, an artisan store featuring handmade products by local artisans and two restaurants.
An Idaho bill setting restrictions on payday lending has passed the state's House of Representatives by only one vote and now awaits the Governor's approval. The bill limits the amount of payday loans a borrower can take out to 25 percent of monthly income and caps the number of times a lender can try to redeem a bounced check at two, ending the possibility of racking up additional fees. The bill also allows a borrower who can't pay within the usual two-week term to request an extended payment plan without additional fees. But Dawn Juker of Catholic Charities of Idaho said the bill doesn't go far enough and she'd rather have no bill at all instead of the one speeding through the Legislature. "There's too many things the consumer would have to be responsible for -- such as requesting an [extended payment plan] -- that payday lenders would not typically market," Juker said.
Nacha, the bank industry group that sets the rules for the network that connects every U.S. bank and credit union, has announced a new effort to achieve same-day electronic transactions. Under Nacha's proposal, payments will eventually be processed twice each weekday. But the overhaul would fall short of the near real-time systems that have been built in the United Kingdom, Mexico, Sweden and other countries -- and will also lag behind numerous proprietary real-time payment systems in the United States. The organization plans to phase in same-day capabilities in three stages, which they hope will assuage concerns raised opponents who derailed a similar effort in 2012 and give banks more time to make costly upgrades to their computer systems.
Illinois attorney general Lisa Madigan has accused payday lender All Credit Lenders of misleading borrowers and skirting the state's usury laws. In a lawsuit against All Credit Lenders, Madigan contends the company deceived borrowers into buying a product pitched as a way to protect them from falling behind on payments in the event of a job loss. But those protections never materialize, the lawsuit said. In fact, the fee is designed to raise interest rates and circumvent the state’s usury cap of 36 percent. The lawsuit referred to the loans as "cash incinerators" with minimum payments that cover only the interest and the mandatory maintenance fee charged each month. “This is one of the more egregious products I have come across,” Madigan said.
ABC Bank hosted the one year anniversary party for Austin Weekly News' West Side Business Network, a group of 75 local entrepreneurs and community members. The evening included refreshments, networking and a presentation from the Oak Park Regional Housing Center on their Austin Ascending program, in which building owners are given grants to improve the appeal of their rentable units. Community organizers Austin Coming Together (ACT) also gave a guest presentation about their many programs and services that build capacity for collaborative action in four focused areas: early childhood, youth, workforce and the built environment.
A new report by the National Consumer Law Center dismisses claims by lending startups that their analysis of big data has allowed them to offer more affordable loans than payday lenders. The consumer advocates found that loans from startups offered effective annual interest rates of 134% to 749%, no better than traditional payday lenders. During loan underwriting, the startups examined variables including rent records, prior payday loan repayment and transactions with pawn shops. But red flags could also include social-media posts about a car breakdown, filling out an application in capital letters or even a user scrolling too quickly through the lender's website without reading materials. The FTC is set this week to discuss whether those algorithms are discriminatory or violate the privacy of borrowers.
Boston-based OneUnited Bank has introduced two new programs designed to help people achieve healthy credit. The bank's Waive Home Loan Program aims to make home financing more affordable by waiving many home loan fees. The program, set to run through the rest of this year, is open to everyone, including first-time homebuyers. OneUnited has also launched the Unity Vista Card, a program that focuses on lending in low- to moderate-income communities. The card features a low annual rate and will not have fees for purchases and deposits. Cardholders are automatically enrolled in OneUnited's "How to Rebuild Credit Program" which offers educational tips and strategies on how a borrower can rebuild and maintain a healthy credit score.
As "crowdfunding" financing platforms grow more prevalent on the web, it is easier than ever for merchants to solicit funds from customers — but is it a good idea? After nine years in Brooklyn, the Chocolate Room, a specialty food shop, experienced a crippling rise in rent. The cafe’s owners, Naomi Josepher and Jon Payson, reluctantly decided to abandon their space and begin figuring out how to finance a $200,000 relocation. They settled on launching a crowdfunding campaign on Kickstarter. Word spread quickly and by the third day, the shop had more than $1,000 pledged toward its goal of $40,000. Then the resistance began. “There’s something about asking your customers to help fund your expansion that just feels a little ... wrong,” posted a commenter on one community website. “Cool or not cool?”
The Senate has confirmed Federal Reserve Governor Sarah Bloom Raskin as deputy secretary at the Treasury Department, making her the highest-ranking woman in the agency’s history. Raskin joined the Fed in 2010 and was known for her focus on consumer protection. In her speeches, she has called attention to problems in the mortgage and foreclosure industries, the consequences of growing wealth and income inequality and the plight of low- and middle-income consumers. Before joining the Fed, Raskin was the chief financial regulator for the state of Maryland. Her confirmation creates another vacant seat on the seven-member board of governors.