Letter to Comptroller Stringer Calling for Divestment from Illegal Payday Lenders

The Honorable Scott M. Stringer Comptroller, New York One Centre Street Ny, NY 10007

Dear Comptroller Stringer:

The undersigned companies urge one to straight away and permanently divest ny City’s retirement funds from payday lending organizations – whose loans are categorically unlawful in nyc. City pension funds invested a lot more than $20 million in payday financing and high-cost installment financing organizations in 2016. Also, City pension funds spent almost $160 million in Lone celebrity Fund VIII, a personal equity investment that has DFC worldwide, Inc.,i which, in change, owns several payday loan providers, including cash Mart plus the Check Cashing Store.

Spending pension that is public in disreputable payday financing businesses raises a primary conflict for the City. Not just do these businesses make triple-digit rate of interest loans which can be unlawful in nyc, but the majority of those happen the topic of enforcement actions for flagrant violations associated with legislation; mistreated clients; and encountered allegations of misleading and defrauding investors – including pension that is public – in states where these are typically allowed to use.

On the list of investments : ● money America Overseas, Inc. and EZCORP, Inc. have already been the topics of major enforcement actions because of the customer Financial Protection Bureau (CFPB) for illegally court that is robo-signing, breaking the federal Military Lending Act,ii and unlawfully harassing borrowers at their domiciles and workplaces,iii among other violations. ● Cash America Global, Inc. additionally made loans with rates of interest that surpassed 1,000per cent to Pennsylvania residents,iv in breach of Pennsylvania’s customer security rules. ● World Acceptance Corp. was under research because of the CFPBv since March 2014 to ascertain if the company’s exploitative business practicesvi come in breach of this customer Financial Protection Act, the facts in Lending Act, along with other federal customer monetary laws and regulations. ● Enova Global, Inc., operator associated with online payday loan provider CashNetUSA, had been discovered to own gotten probably the most consumer complaints among all payday lenders,vii based on the CFPB’s customer problem database. ● DFC Global, Inc. had been sued by a general general general general general general general public retirement investment in the grounds it complied with federal government laws and guidance in regards to reckless financing techniques, and [2] that the organization made ‘prudent,’ ‘conservative,’ and ‘responsible’ underwriting decisions whenever making loans.”viii that it“misrepresented to investors that [1

We think these opportunities pose reputational, appropriate, regulatory and financial dangers, and therefore you have got an ethical and fiduciary responsibility to divest.

Ny is just one of the 15 states, plus D.C., where state that is strong regulations and enforcement effortlessly ban payday lending. brand brand brand New York’s usury guidelines are among the list of strongest when you look at the country, capping interest levels at 25% APR. Because of our ban, New Yorkers save about $790 million each year in feesix that payday loan providers and their ilk would otherwise siphon—an estimate that doesn’t also add bank overdraft charges and other financial fallout from pay day loans.

In states where in fact the payday financing industry is allowed to work, individuals struggling to obtain from paycheck to paycheck are methodically targeted for high-cost loans they can not pay for. Payday loan providers charge extortionate costs and interest that is shockingly high – typically between 300% and 400% APR. The lending that is payday model is centered on loan-flipping, as borrowers typically must refinance or move over their loans – usually multiple times – ensnaring them in a long-lasting period of financial obligation. Analysis has shown that communities of color are disproportionately targeted for those debt-trap loans.x

Inspite of the clear advantages of banning payday loan providers as well as other fringe financial services businesses have actually for a long time forced legislation in Albany that will legalize high-cost predatory lending in ny. Those efforts have already been beaten compliment of advocacy that is tireless a statewide coalition of civil legal rights, faith-based, work and community teams.

This current year, lawmakers once once once once once once again reaffirmed brand brand brand brand brand New York’s commitment that is longstanding maintaining payday advances away from our state by rejecting a few billsxi – supported by effective passions like brand brand brand brand brand New York’s check cashing industry and a California-based “fintech” corporation – that will have inflated brand New York’s usury regulations and exposed the floodgates to predatory financing.

Meanwhile, at the time of financial 12 months 2016, the five new york retirement funds committed to at the least six for the country’s largest payday and installment that is high-cost – money America Global, Inc., Enova Global, Inc., EZCORP, Inc., First Cash Financial solutions, Inc., Regional Management Corp., and World Acceptance Corp. – and ended up being spent greatly in Lone celebrity Fund VIII, a personal equity investment that has a few notorious predatory financing organizations, such as the payday financing giant, DFC worldwide.

These assets fly when confronted with brand brand brand brand New York’s groundbreaking and effective actions to help keep lending that is payday of our state. New York’s enforcement agencies, for instance, have actually cracked straight straight straight straight straight down on unlawful payday lending, https://cash-central.com/payday-loans-az/ issuing warnings to loan companies it was unlawful to get on payday advances in Ny; directing payday lenders to avoid making unlawful pay day loans to Nyc State residents; and contacting banking institutions and their re re payments processors to cease permitting payday loan providers to get into New Yorkers’ bank reports. Nyc in addition has acquired contract through the nationwide credit reporting agencies to stop reporting unlawful payday advances on New Yorkers’ credit file.

Ny has made essential strides toward financial equality and possibility recently. A year ago, for instance, the worker-led “Fight for $15” motion won a landmark enhance to your state’s wage that is minimum. And though we now have so much more work ahead, bankrolling a business that methodically exploits employees, retirees, among others struggling getting by and strips wide range from low-income communities and communities of color threatens not just to undercut those gains – it really is an affront to ny values.

Just last year, nj-new jersey, that also effortlessly bans lending that is payday offered its pension investment opportunities in an exclusive equity fund that held Ace Cash Express, another for the nation’s biggest payday lenders.xii Commenting in the state’s divestment using this payday home loan company, the president of this nj-new jersey State Investment Council reported, “The bright line is what’s legal to complete and what’s perhaps perhaps perhaps maybe perhaps not appropriate to complete into the state of New Jersey.”xiii At the very least, the newest York City retirement funds should follow this exact same bright line and completely and completely divest from payday financing businesses.

Please contact Andy Morrison at brand brand brand brand New Economy venture with concerns: 212-680-5100 x210.

Brooklyn-Wide Interagency Council on Aging (BWICA) academic Fund, Inc. Dēmos Fordham Law class Feerick Center for personal Justice trusted old fashioned Lower East Side (GOLES) Housing Court Answers, Inc. Housing and Family Services of better ny, Inc. Los Angeles Fuerza Unida, Inc. LatinoJustice PRLDEF Lower East Side People’s FCU Mobilization for Justice, Inc. (previously MFY Services that is legal Center for Law and Economic Justice New Economy venture New Yorkers for Responsible Lending ny Legal Assistance Group NY StateWide Senior Action Council, Inc. NYU Law Students for Economic Justice The performing World

Groups delivered a comparable page to NYS Comptroller Thomas P. DiNapoli regarding nyc State retirement funds.