Payday Loan Business-Center for Irresponsible Lending at it Again!

Yes, the CRL, Center for Responsible Lending, who we in the payday loan industry like to refer to as “The Center for Irresponsible Lending” has done it again. They “helped craft” new federal legislation with the aid of U.S. Sen. Kay Hagan, D-N.C.

The bill, called The Payday Lending Limitation Act of 2010, would modify the Truth in Lending Act. Senator Hagan will introduce it as a standalone today, and again next week as an amendment to the financial regulatory reform bill making its way through the Senate.

And just who is The Center for Responsible Lending?

Herb and Marion Sandler! According to

“Herb and Marion Sandler are the billionaire founders of the Center for Responsible Lending. The Sandlers made a fortune in the subprime mortgage industry, thanks to the success of their bank, Golden West Financial.

Golden West and its subsidiary, World Savings Bank, were among the biggest sources of subprime mortgages, especially of adjustable-rate loans called option-ARMs. Herb Sandler is credited with the invention of the option-ARM, which his bank marketed as “Pick-a-Payment” mortgages. These loans were extraordinarily popular in the years preceding the subprime mortgage crisis, generating billions in profits for the Sandlers’ banking empire.

Recent exposés by “60 Minutes” and the New York Times have focused national attention on the Sandlers’ role in the subprime crisis. The Sandlers’ loans, described in the Times as “the Typhoid Mary of the mortgage industry,” are part of a second wave of toxic debt predicted to default over the next several years, hitting the economy with another $600 billion in losses.

The Sandlers made over $2.3 billion on the sale of their company to Wachovia in 2006, and they have used their fortune to fund organizations advancing their political aims. They have given millions of dollars to left-wing groups, including ACORN (radical activists implicated in election fraud investigations in over a dozen states), and the Center for Responsible Lending (a “consumer advocacy” front-group that lobbied for expanded subprime lending while promoting its funders’ business interests).”

Read more about the CRL Here:

And more here about the Proposed Bill:


Federal Payday Loan Legislation

Fredreka Schouten at has an informative article describing the payday loan industry’s lobbying efforts in Washington DC. They reported that CFSA, The Community Financial Services Association, representing roughly half of all brick-n-mortar payday loan operators spent $2,6000,000 in 2009 compared to The US Chamber of Commerce at $3,000,000. also mentions OLA, The Online Lenders Association, and their efforts to lobby on behalf of Internet payday loan lenders in Washington DC as well. further reports, “A bill that recently passed the Senate banking committee could shield some of the industry from the new agency’s enforcement powers, but a House-passed version would make the lenders subject to full enforcement by the proposed Consumer Financial Protection Agency.

The fight now moves to the full Senate, which may take up the bill later this week.”

With an average loan to payday loan consumers approaching $345, it seems crazy to us for the crew in D.C to be focused on the payday loan industry. After all, it’s not as if the payday loan industry contributed to the “too big to fail” mantra currently consuming Big Brother.

Read the entire article here.


Payday Loans and the Hypocrisy of Their Competitors

Texas Credit Union League Headline:

“Texas Regulator Bid To Cap Payday Loan Fees Comes At Bad Time.”

I attended my first national payday loan convention in 1997. As long as I can remember, the payday loan product has been attacked by banks and credit unions. After all, they want our customers! In the past they’ve simply failed to figure out how to properly serve our customer with the right products and still make money.

In Texas, as in many locales, credit unions are aggressively developing products to compete with payday loans; the majority of which are offered under the CSO Model ( Credit Services Organization ). In a nutshell, under the CSO Model, a payday loan company simply fills out a one page form required to register as a CSO along with a bond and they’re in business. (There are a few other details…like forming two entities “at an arms-length-relationship” to (1)act as a “CSO and (2) a “Lender.”)

Anyway… a few Texas Credit Unions have launched a new payday loan product just as the Texas State Credit Union Department has proposed new limits on fees for payday loans.The Texas State Credit Union proposal would limit fees at $20 for unsecured loans less than $1000 for a maximum of 6 months. Additionally the new credit union proposal would limit CU’s to a maximum of 20% of their portfolio.

Now, you readers in Texas don’t need to freak-out! This proposal only relates to Texas credit Unions, not the CSO Model. It’s still an interesting read if I do say so myself!

So… I was incredulous when I read this statement by Jeff Huffman, chief lobbyist for the Texas CU League, “We think that credit unions’ boards and management are really in the best position to determine the fees based on their individual situations.” He continued by saying, “Market conditions vary across the state. We don’t think the regulator should get involved [in setting the fees].”

“They ought to get off the backs of credit unions,” he said. “It’s just a rule that’s unnecessary.”


Whoa! Credit unions and banks spend tons of cash lobbying against payday loan companies while extolling the virtues of protecting our customer from “a cycle of debt” and “poor disclosure.” They would like nothing better than to eliminate payday loan companies. They do their best to regulate us out of business by lobbying for legislation on both a state and federal level.

Those of us in the payday loan industry respond by simply pointing out that our product is in huge demand. Our customers continue to support us by choosing our payday loan products. They choose us because we fully disclose exactly what our product will cost them and when our product is appropriate. If you, the reader doubt this, go into a typical payday loan store and look! In spite of what the media reports, we do fully disclose EVERYTHING; unlike bank, credit union and credit card NSF fees, overdraft fees, late fees… Who can understand all their fees?

Sorry about the rant… I go crazy when our competitors attempt to portray us as loan sharks and themselves as protectors of the people! As they say, “Follow the money.”

So… “Texas Regulator Bid To Cap Payday Loan Fees Comes At Bad Time”? All I can say is, “Poor babies!”

Check back with for updates on this proposal. Page 14.


Colorado Payday Loan Update

Colorado payday loan opponents are at it again! According to the Denver Post, “A new version of a payday loan bill passed the House Judiciary Committee on a 7-4 party-line vote Thursday, the second time the bill has come out of the committee this year.”

“The newest version of the Colorado payday loan bill caps interest rates at 45 percent and limits lenders to charging no more than a $50 annual origination fee on any payday loan.”

Colorado “do-gooders” have been introducing various payday loan legislation for the past several years. Lucky for consumers each bill has experienced severe opposition and died in committee.

Let’s hope this bill experiences a similar death!


Payday Loan Company EZCORP on the Motley Fool

Rich Duprey at The Motley Fool has an insightful post regarding the future of the payday loan and pawn industry. His post states, “Greater sales volume for merchandise, an increase in same-store-sales and higher fees generated from payday loans allowed EZCORP and rival First Cash Financial Services (Nasdaq: FCFS) to achieve rich results last quarter.”

The point is made that our payday loan customers, like most citizens of the world, are loaded with debt and have no one to turn to but us. Who but a payday loan lender will advance $300 to $1500 with little more than a promise to pay us back. A job and a bank account is all that is required.

Read the full article here; it’s great reading… Rich Duprey & The Motley Fool