WASHINGTON More than 100,000 U.S. troops have been saddled with long-term debt in return for short-term cash from "payday loan" stores charging interest rates that would make the mob blush. And the loan industry's powerful lobbyists, both Democratic and Republican, are fighting hard to keep the interest windfalls, which in at least one case topped 500%, the Daily News has learned.
"The troops get roped into it and they can't get out; it becomes a spiral," said Joyce Raezer of the National Military Families Association.
But spokesmen for the industry argue that stores with names such as Planet Cash offer a service "bridging the gaps between paydays" that banks, credit unions and the military can't or won't provide same-day loans to troops who are credit risks.
At a typical payday store, a borrower would show a pay stub and proof of a bank account to borrow $100 for a charge of $120. The borrower writes a check for $120 and postdates the check to his next payday.
After two weeks, if the borrower can't pay, the loan is rolled over for another $20, and Pentagon officials said most troops go through four or five rollovers.
Army Chief Warrant Officer Thomas Burden, who is now serving in Iraq, told Congress he paid back $1,400 on an original loan of $300.
"It just kind of keeps snowballing if you don't have the money to cover it," said Burden, 35.
In a letter supporting congressional efforts to curb the payday business, David Chu, the undersecretary of defense for personnel, estimated that 7% of the active-duty military, or 100,000 troops, used the loans, but consumer groups said the number could be as high as 20%.
While complaining about "predatory lenders," the military also has failed to control the business, the Government Accountability Office, the investigative arm of Congress, found.
In a report last spring, the GAO urged commanders to consider declaring the payday stores off-limits to troops and stopping the stores from advertising in base newspapers.
The Community Financial Services Association [contact info below], the trade group for the booming $40 billion payday business with 22,000 U.S. outlets, rejected the charges of predatory lending.
"It's so easy to demagogue," said association spokesman Steve Schlein. "We provide a product people are begging for."
If the military objects to payday loans, Schlein added, "Then why don't military credit unions offer short-term loans?"
Several bills have been introduced in Congress to rein in payday loans to the military, but the financial group has marshaled platoons of former Republican and Democratic officials to lobby against the legislation.
The dispute has put old friends at odds. Sen. Hillary Clinton (D-N.Y.) has been pushing for limits and co-sponsored an amendment added to the defense spending bill to educate troops on personal finance.
Pushing back has been Maria Echavaste, a deputy chief of staff to former President Bill Clinton and now a lobbyist for the financial services group.
source: http://nydailynews.com/business/v-echo/story/377829p-320905c.html 2jan2006
CFSA Contact Info
Office Hours: 8:00 am to 5:00 pm Eastern Time
Office Location: 515 King Street, #300; Alexandria, VA 22314
Office Phone: 703.684.1029
email: cfsa@multistate.com
web: www.cfsa.net
**************
US Patriot Act/OFAC List
Financial Crimes Enforcement Network
UPDATE ON OFAC COMPLIANCE
In accordance with the provisions of the US Patriot Act requiring Office of Foreign Asset Control (OFAC) clearance for payday advance customers, it is the opinion of CFSAs legal and regulatory counsel that small dollar loans are NOT exempt from OFAC compliance.
All lenders, including payday lenders, are required to screen loan applicants against the OFAC list of known terrorists and money launderers.
Additionally, when searching the OFAC list, care should be taken to avoid false matches. The names on the OFAC list often include addresses, middle initials, and even a date of birth. A match does not exist unless there is an exact match of name and other related information.
Regulations from the US Treasury Department specific to the Deferred Presentment industry are expected to be released soon. In the meantime, you can use this link to do an on-line check of the OFAC database.
source: http://www.cfsa.net/uspatact/auspatact.html 2jan2006
Board of Directors
CFSA is a non-profit (501c6) professional trade association with headquarters at 515 King Street, #300, Alexandria, VA. The Board of Directors are selected from executives within CFSA member companies. Each membership category stipulates through the by-laws what representation they will have on the Board. Categories other than Sustaining Members have their Board representative(s) elected at the Annual Meeting held during the first quarter of each year. The officers of the Association are elected by the Board. All Directors serve two year terms and may be re-elected.
OFFICERS
DIRECTORS
source: http://www.cfsa.net/genfo/fgeninf.html 2jan2006
Annual Meeting Information
CALIFORNIA!
In The Middle of Winter.
Keep March 1st through 4th open for the Community Financial Services Association of America (CFSA) Annual Meeting and Conference!
It will be just the break you need. Save the date (March 1 - 4, 2006) and plan to attend the 2006 CFSA Annual Meeting and Conference at the beautiful La Quinta Resort & Club in the sunny Palm Springs desert of La Quinta, California.
It's the major event of the year focusing on the topics most important to the payday advance industry. You'll hear legislative and regulatory updates, valuable business tips and receive information critical to your bottom line. Look for meeting announcements and registration materials coming soon!
source: http://www.cfsa.net/genfo/kgeninf.html 2jan2006
|
To
send us your comments, questions, and suggestions click
here |