Letter to Comptroller Stringer Calling for Divestment from Illegal Payday Lenders

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

Dear Comptroller Stringer:

The organizations that are undersigned you to definitely instantly and permanently divest ny City’s retirement funds from payday lending businesses – whose loans are categorically unlawful in how to make extra money in South Dakota nyc. City pension funds invested significantly more than $20 million in payday lending and high-cost installment financing organizations in 2016. Furthermore, 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 while the Check Cashing Store.

Spending pension that is public in disreputable payday financing businesses raises a primary conflict when it comes to City. Not merely do these businesses make triple-digit interest loans which are unlawful in ny, but the majority of these are the main topic of enforcement actions for flagrant violations for the legislation; mistreated clients; and encountered allegations of misleading and defrauding investors – including public retirement funds – in states where they truly are allowed to work.

Among the list of investments : ● money America Overseas, Inc. and EZCORP, Inc. have already been the topics of major enforcement actions by 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 Overseas, Inc. additionally made loans with rates of interest that surpassed 1,000per cent to Pennsylvania residents,iv in breach of Pennsylvania’s customer security legislation. ● World Acceptance Corp. happens to be under research by 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 economic regulations. ● Enova Global, Inc., operator associated with online payday loan provider CashNetUSA, ended up being discovered to own gotten the absolute most consumer complaints among all payday lenders,vii in line with the CFPB’s customer problem database. ● DFC Global, Inc. had been sued by general general public retirement investment from the grounds so it “misrepresented to investors that [1] it complied with federal government laws and guidance pertaining to reckless financing methods, and [2] that the business made ‘prudent,’ ‘conservative,’ and ‘responsible’ underwriting decisions when creating loans.”viii

We think these assets pose reputational, appropriate, regulatory and financial dangers, and that you’ve got an ethical and obligation that is fiduciary divest.

Ny is amongst the 15 states, plus D.C., where state that is strong guidelines and enforcement effortlessly ban payday lending. Brand brand brand brand New York’s usury laws and regulations are one of the strongest when you look at the country, capping interest levels at 25% APR. By way 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 payday advances.

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

Regardless of the clear great things about banning payday loan providers along with other fringe financial services businesses have actually for a long time forced legislation in Albany that will legalize high-cost predatory lending in nyc. Those efforts have already been beaten because of advocacy that is tireless a statewide coalition of civil liberties, faith-based, work and community teams.

This season, lawmakers once once once once once once once again reaffirmed brand brand brand brand New York’s commitment that is longstanding maintaining pay day loans away from our state by rejecting a few billsxi – supported by effective passions like brand brand brand brand brand brand New York’s check cashing industry and a California-based “fintech” corporation – that will have inflated brand 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 high-cost installment lenders – money America Global, Inc., Enova Global, Inc., EZCORP, Inc., First Cash Financial solutions, Inc., Regional Management Corp., and World Acceptance Corp. – and had been 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 opportunities 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 down on unlawful payday lending, issuing warnings to collectors it was unlawful to get on pay day loans in Nyc; directing payday lenders to quit making unlawful payday advances to Ny State residents; and contacting banking institutions and their re re re re re re payments processors to cease enabling payday loan providers to gain access to New Yorkers’ bank reports. Ny has additionally acquired contract through the nationwide credit agencies to stop reporting unlawful payday advances on New Yorkers’ credit file.

Ny has made crucial strides toward financial equality and possibility recently. A year ago, as an example, the worker-led “Fight for $15” motion won a landmark enhance to your state’s wage that is minimum. And though we now have even more work ahead, bankrolling a business that methodically exploits employees, retirees, as well as others struggling to have 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 of this nation’s biggest payday lenders.xii Commenting regarding the state’s divestment out of this payday home loan company, the president associated with nj-new jersey State Investment Council reported, “The bright line is what’s legal to accomplish and what’s perhaps perhaps maybe maybe perhaps perhaps maybe not appropriate to complete within the state of New Jersey.”xiii The New York City pension funds should follow this same bright line and fully and permanently divest from payday lending companies at a minimum.

Please contact Andy Morrison at brand brand 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 classic 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 appropriate Services) nationwide 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 letter that is similar NYS Comptroller Thomas P. DiNapoli regarding ny State retirement funds.