The Honorable Scott M. Stringer Comptroller, New York One Centre Street Ny, NY 10007
Dear Comptroller Stringer:
The undersigned companies urge one to instantly 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. Also, 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 general public retirement funds in disreputable payday financing organizations raises a primary conflict when it comes to City. Not just do these businesses make triple-digit rate of interest loans which can be unlawful in nyc, but the majority of those have now been the main topic of enforcement actions for flagrant violations associated with legislation; mistreated clients; and encountered allegations of misleading and defrauding investors вЂ“ including public retirement funds вЂ“ in states where these are generally allowed to use.
On the list of investments : в—Џ money America Overseas, Inc. and EZCORP, Inc. were 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 domiciles and workplaces,iii among other violations. в—Џ Cash America Overseas, Inc. additionally made loans with interest levels that surpassed 1,000per cent to Pennsylvania residents,iv in breach of PennsylvaniaвЂ™s customer security regulations. в—Џ World Acceptance Corp. was under research because of the CFPBv since March 2014 to ascertain whether or not the companyвЂ™s exploitative business practicesvi have been in breach associated with the customer Financial Protection Act, the reality in Lending Act, along with other federal customer economic rules. в—Џ Enova Overseas, Inc., operator for the online payday loan provider CashNetUSA, had been discovered to possess gotten probably the most consumer complaints among all payday lenders,vii based on the CFPBвЂ™s customer problem database. в—Џ DFC Global, Inc. ended up being sued with general public retirement investment from the grounds so it вЂњmisrepresented to investors that  it complied with federal government laws and guidance pertaining to reckless lending methods, and  that the business made вЂprudent,вЂ™ вЂconservative,вЂ™ and вЂresponsibleвЂ™ underwriting decisions when creating loans.вЂќviii
We think these assets pose reputational, appropriate, regulatory and financial dangers, and therefore you have got an ethical and obligation that is fiduciary divest.
Ny is just one of the 15 states, plus D.C., where state that is strong regulations and enforcement efficiently ban payday lending. Brand brand brand New YorkвЂ™s usury laws and regulations are on the list of strongest into the country, capping rates of interest 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 financial fallout from payday advances.
In states where in actuality the payday financing industry is allowed to work, individuals struggling to obtain from paycheck to paycheck are methodically targeted for high-cost loans they are unable to manage. Payday loan providers charge exorbitant costs and shockingly high interest rates вЂ“ typically between 300% and 400% APR. The payday financing company model is based 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. Studies have shown that communities of color are disproportionately targeted of these loans which are debt-trap
Regardless of the clear great things about banning payday loan providers as well as other fringe financial services organizations have actually for many years forced legislation in Albany that could legalize high-cost predatory lending in nyc. Those efforts have now been beaten because of advocacy that is tireless a statewide coalition of civil liberties, faith-based, work and community teams.
This current year, lawmakers once once once once again reaffirmed brand brand brand brand New YorkвЂ™s longstanding dedication to 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 could have inflated brand brand brand brand New YorkвЂ™s usury guidelines and started the floodgates to predatory financing.
Meanwhile, at the time of financial 12 months 2016, the five new york retirement funds dedicated to at the least six of this countryвЂ™s largest payday and installment that is high-cost вЂ“ money America Global, Inc., Enova Overseas, Inc., EZCORP, Inc https://approved-cash.com/payday-loans-vt/., First Cash Financial solutions, Inc., Regional Management Corp., and World Acceptance Corp. вЂ“ and ended up being spent greatly in Lone celebrity Fund VIII, an exclusive 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 brand brand New YorkвЂ™s groundbreaking and effective actions to help keep lending that is payday of our state. New YorkвЂ™s enforcement agencies, as an example, have actually cracked straight straight straight straight straight straight down on unlawful payday lending, issuing warnings to loan companies it was unlawful to gather on payday advances in Nyc; directing payday lenders to end making unlawful pay day loans 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 credit that is national to cease reporting unlawful payday advances on New YorkersвЂ™ credit file.
Nyc has made essential strides toward financial equality and possibility recently. Just last year, as an example, the worker-led вЂњFight for $15вЂќ motion won a landmark enhance to your stateвЂ™s wage that is minimum. And though we now have so much more work ahead, bankrolling a business that methodically exploits employees, retirees, among others struggling getting 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 opportunities in an exclusive equity fund that held Ace Cash Express, another regarding the nationвЂ™s biggest payday lenders.xii Commenting regarding the stateвЂ™s divestment with this lending that is payday, the president regarding the nj State Investment Council claimed, вЂњThe bright line is whatвЂ™s legal to accomplish and whatвЂ™s maybe perhaps perhaps maybe maybe not appropriate to accomplish within the state of New Jersey.вЂќxiii 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 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 good old fashioned 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 comparable page to NYS Comptroller Thomas P. DiNapoli regarding nyc State retirement funds.