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 you to definitely straight away and permanently divest ny CityвЂ™s retirement funds from payday lending organizations вЂ“ whose loans are categorically unlawful in nyc. City pension funds invested a lot more than $20 million in payday high-cost and lending 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 additionally the Check Cashing Store.
Spending pension that is public in disreputable payday financing businesses raises an immediate 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 have now been the topic of enforcement actions for flagrant violations for the legislation; mistreated clients; and encountered allegations of misleading and defrauding investors вЂ“ including pension that is public вЂ“ in states where they have been allowed to work.
On the list of investments : в—Џ money America Overseas, Inc. and EZCORP, Inc. have now 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 houses and workplaces,iii among other violations. в—Џ Cash America Global, Inc. additionally made loans with rates of interest that surpassed 1,000per cent to Pennsylvania residents,iv in breach of PennsylvaniaвЂ™s customer security rules. в—Џ World Acceptance Corp. happens to be under research because of the CFPBv since March 2014 to find out if the companyвЂ™s exploitative business practicesvi come in breach associated with the customer Financial Protection Act, the facts in Lending Act, along with other federal customer economic guidelines. в—Џ Enova Global, Inc., operator associated with payday that is online CashNetUSA, ended up being discovered to possess gotten probably the most consumer complaints among all payday lenders,vii based on the CFPBвЂ™s customer issue database. в—Џ DFC Global, Inc. ended up being sued by a general general general general general general public retirement investment regarding the grounds it complied with federal government laws and guidance in regards to reckless financing methods, and  that the organization made вЂprudent,вЂ™ вЂconservative,вЂ™ and вЂresponsibleвЂ™ underwriting decisions whenever making loans.вЂќviii that itвЂњmisrepresented to investors that [1
We think these opportunities pose reputational, appropriate, regulatory and financial dangers, and that you’ve got an ethical and obligation that is fiduciary divest.
Nyc is just one of the 15 states, plus D.C., where strong state usury rules and enforcement efficiently ban payday lending. brand brand brand brand New YorkвЂ™s usury regulations are on the list of strongest into the country, capping interest levels at 25% APR. Compliment of our ban, New Yorkers save about $790 million each year in feesix that payday loan providers and their ilk would otherwise siphonвЂ”an estimate that will not also add bank overdraft charges and other fallout that is economic pay day loans.
In states in which the payday financing industry is allowed to work, individuals struggling to have from paycheck to paycheck are methodically targeted for high-cost loans they are unable to manage. Payday loan providers charge extortionate charges and interest that is shockingly high вЂ“ 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 вЂ“ usually multiple times вЂ“ ensnaring them in a long-lasting period of financial obligation. Analysis has shown that communities of color are disproportionately targeted of these debt-trap loans.x
Regardless of the clear great things about banning payday loan providers along with other fringe financial services organizations have actually for a long time pressed legislation in Albany that will legalize high-cost predatory lending in nyc. Those efforts have now been beaten because of advocacy that is tireless a statewide coalition of civil legal rights, faith-based, work and community teams.
In 2010, lawmakers once once once once again reaffirmed brand brand brand New YorkвЂ™s commitment that is longstanding maintaining pay day loans away from our state by rejecting a few billsxi вЂ“ supported by effective passions like brand brand brand New YorkвЂ™s check cashing industry and a California-based вЂњfintechвЂќ corporation вЂ“ that will have inflated brand brand New YorkвЂ™s usury legislation and launched 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 of this countryвЂ™s largest payday and installment that is high-cost вЂ“ money America Overseas, Inc., Enova Global, Inc., EZCORP, Inc., First Cash Financial solutions, Inc., Regional Management Corp., and World Acceptance Corp. вЂ“ and had been spent greatly in Lone celebrity Fund VIII, an exclusive equity investment that owns a few notorious predatory financing organizations, such as the payday financing giant, DFC worldwide.
These assets fly when confronted with brand brand brand New YorkвЂ™s groundbreaking and effective actions to help keep payday financing out of our state. New YorkвЂ™s enforcement agencies, as an example, have actually cracked straight straight straight down on unlawful lending that is payday issuing warnings to loan companies it was unlawful to get on pay day loans in Nyc; directing payday lenders to cease making unlawful payday advances to Nyc State residents; and contacting banking institutions and their re re re re payments processors to end permitting payday loan providers to gain access to New YorkersвЂ™ bank reports. Nyc in addition has acquired contract through the nationwide credit reporting agencies to stop reporting unlawful payday advances on New YorkersвЂ™ credit file.
Ny has made strides that are important financial equality and possibility recently. A year ago, for instance, the worker-led вЂњFight for $15вЂќ motion won a landmark enhance to your stateвЂ™s minimal wage. And even though we now have a great deal more work ahead, bankrolling a business that methodically exploits employees, retirees, among others struggling to obtain by and strips wide range from low-income communities and communities of color threatens not just to undercut those gains вЂ“ it really is an affront to ny values.
A year ago, nj-new jersey, that also efficiently bans payday lending, offered its pension investment assets in a personal equity fund that held Ace Cash Express, another for the nationвЂ™s biggest payday lenders.xii Commenting in the stateвЂ™s divestment using this lending that is payday, the president associated with nj-new jersey State Investment Council reported, вЂњThe bright line is whatвЂ™s legal to accomplish and whatвЂ™s maybe perhaps maybe perhaps maybe maybe not appropriate doing into the state of New Jersey.вЂќxiii At the very least, the latest York City payday loans MS retirement funds should follow this exact same bright line and completely and completely divest from payday financing organizations.
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 that is( academic Fund, Inc. DД“mos Fordham Law class Feerick Center for personal Justice classic Lower East Side (GOLES) Housing Court Answers, Inc. Housing and Family Services of better nyc, Inc. Los Angeles Fuerza Unida, Inc. LatinoJustice PRLDEF Lower East Side PeopleвЂ™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 nyc State retirement funds.