When the state of Missouri released their most recent study on the use of payday lenders many in the media crowed about the clear reduction in companies marketed as
Payday Lenders. This reduction, though turned into a painful mirage, as Missouri found themselves with Payday Lenders on steroids - now small "installment" lenders who would loan more money, at a slightly longer term, generally 120 days, at the same similar steep percentage rage.
http://www.stltoday.com/...
“We have seen a massive increase in the number of products that aren’t classified as payday loans,” said Molly Fleming, who leads a payday loan reform campaign for the PICO National Network. She was heavily involved in a 2012 statewide initiative in Missouri to cap interest rates on loans at 36 percent. The measure, which faced well-financed industry opposition, failed to get on the ballot.
The biannual survey from the state division of finance showed the number of payday loans issued in 2014 had dropped 20 percent since 2012, from 2.34 million loans to 1.87 million loans. That’s well below the 2006 total of 2.87 million. And the number of lenders declined from a 2006 peak of 1,275 to 838, as of Thursday.
But the state doesn’t track consumer installment loans, a product that many lenders are moving to in the face of growing public criticism and regulatory scrutiny.
Since installment loans aren't even tracked by the state, many began to wonder how big this booming business was becoming. Well, to imply that it's a big business is an understatement.
While the number of lenders in Missouri has been reduced - down to 838 lenders - the number of outlets available to use to those lenders and their new products has boomed.
http://www.theguardian.com/...
According to the Better Business Bureau, the number of lenders grew nationally from 2,000 in 1996 to an estimated 22,000 by 2008. In Missouri, there are 958 more payday lenders than there are McDonald’s restaurants, a ratio reflected in most US states. The 2008 economic collapse only increased the outlets’ clientele, particularly in St Louis, which has more unbanked people than any other US city.
The impact of predatory lending continues to decimate those who borrow - but too many of us who never fall into the trap don't realize the extent of the damage being caused.
In a legal brief submitted as part of a class action, we see that people who borrowed $80 ended up with garnished debt in the thousands, and final debt nearing $20,000. All for borrowing $80 - food money.
http://www.theguardian.com/...
“Here’s a client of ours,” he says, showing me a legal brief. “She borrowed $100. She made one instalment payment, couldn’t pay the rest, and was sued. Since then they’ve collected $3,600 in payments by garnishing her wages. That’s 36 times the hundred bucks she owed. They told her she still owes $3,600 more. The wage garnishments are reducing the debt slower than the high interest, which is 200%. She called her attorney and asked ‘When will I be done paying this?’ And he said: ‘Never.’ It’s indentured servitude. You will never, ever be done.”
The lending practice which puts people on a constant treadmill, unable to pay back the debt they owe which has been unreasonably inflated seems like a problem that legislators both Republicans and Democrats could step up and stop - and be heroes to a large number of average citizens.
National Republicans did step up to the plate to do something about payday loans. They stepped in on behalf of the payday lenders and against US Military men & women.
http://www.huffingtonpost.com/...
Republicans had slipped the deregulation measure into the National Defense Authorization Act -- a major bill that sets the military's funding levels. The bill would have imposed a one-year delay on new Department of Defense rules designed to shield military families from abusive terms on payday loans and other forms of expensive short-term credit. Politicians frequently seek to delay measures in order to buy time to marshall the votes needed to fully repeal them.
What makes the actions of the national Republicans so galling is that Missouri - a state that is viewed amongst the hardest hit by predatory practices - had several Republicans on board, putting predatory lenders ahead of their own military members.
The 30 Republicans who voted to delay the protections for soldiers were Reps. Mac Thornberry (R-Texas), Rob Bishop (R-Utah), Jim Bridenstine (R-Okla.), Mo Brooks (R-Ala.), Bradley Byrne (R-Ala.), Mike Coffman (R-Colo.), K. Michael Conaway (R-Texas), Paul Cook (R-Calif.), John Fleming (R-La.), J. Randy Forbes (R-Va.), Trent Franks (R-Ariz.), Sam Graves (R-Mo.), Vicky Hartzler (R-Mo.), Joe Heck (R-Nev.), Duncan Hunter (R-Calif.), John Kline (R-Minn.), Steve Knight (R-Calif.), Doug Lamborn (R-Colo.), Tom MacArthur (R-N.J.), Martha McSally (R-Ariz.), Jeff Miller (R-Fla.), Mike Rogers (R-Ala.), Austin Scott (R-Ga.), Bill Shuster (R-Pa.), Michael Turner (R-Ohio), Jackie Walorski (R-Indiana), Brad Wenstrup (R-Ohio), Joe Wilson (R-S.C.), Robert Wittman (R-Va.) and Ryan Zinke (R-Mont.).
Vicky Hartzler and Sam Graves, Missouri representatives who cover the north west corner of the state (Kansas City and surrounding areas) also cover an area with a large tradition of military families thanks to nearby Whiteman Air Force Base.
Voting in favor of predatory lenders over military members should be shame enough; but for Hartzler & Graves, though, it is siding with an industry that is wrecking havoc with their state.
More than 2.8 Million payday and installment loans were made in Missouri at interest rates up to 1,900%. 2.8 Million chances for someone to end up with debt they couldn't repay on an emergency loan at predatory rates.