Municipalities Offer Loan Programs as Alternative to Payday Loans | The Line


>>BACK TO THE LINE, NEW MEXICO
IS ESPECIALLY VULNERABLE TO PREDATORY LENDING BECAUSE WE
ARE POOR STATE. SEEKING TO COMBAT THE PERSONAL
DEBT SPIRAL, SOME LOCAL GOVERNMENTS HAVE OFFERED LOANS
TO PUBLIC EMPLOYEES. INTEREST RATES SEEM STEEP
UNTIL YOU COMPARE THEM TO THE HIGHER RATE THAT PAYDAY
LENDERS CHARGE. JESSICA OF THE ALBUQUERQUE
JOURNAL REPORTED ON THE PARTNERSHIP BOTH ALBUQUERQUE
AND BERNALILLO COUNTY HAVE WITH A PRIVATE COMPANY THAT
HAS LOANED MORE THAN A MILLION TO HUNDREDS OF EMPLOYEES,
OTHER MUNICIPALS, INCLUDING LAS CRUCES AND SANTA FE HAVE
SIMILAR PROGRAMS. LIEUTENANT GOVERNOR, YOU
WORKED CLOSELY WITH THE AG ON TRYING TO REIN IN PREDATORY
LENDING. PATTY LUNDSTROM ON THIS AS
WELL. SHE WAS RIGHT BY YOUR SIDE ON
THAT. WITH INTEREST RATES UP TO 25%
FOR GOVERNMENT EMPLOYEES, IT IS SOMETHING INTERESTING AND I
AM JUST INTERESTED IN YOUR PERSONAL TAKE WHEN YOU READ
THAT ARTICLE HOW DID IT HIT YOU IN THE GUT WHEN YOU SAW
25% RATE? IS IT LOW, HIGH?>>COMPARED TO PAYDAY LENDERS
IT IS REALLY LOW, BUT COMPARED TO WHAT OTHER PEOPLE CAN
BORROW FOR, IT IS LIKE HAVING A CREDIT CARD AT 25, 27%. SO — BUT IT IS A WAY TO, I
THINK, PROVIDE A BENEFIT TO YOUR CITY, COUNTY EMPLOYEES
THAT THEY MAY NOT HAVE OTHERWISE. WHEN WE TALK ABOUT SALARIES IN
GENERAL AT THE MUNICIPAL LEVEL, AND IF PEOPLE GET IN A
BIND, SO, INITIALLY, I WAS LIKE, OH, WE CAN’T CELEBRATE
24% INTEREST RATE BUT WHEN YOU PUT IN CONTEXT OF BEING AN
EMPLOYEE BENEFIT AND GETTING PEOPLE OUT OF A JAM MAYBE,
LOOKS LIKE MOST OF THEM ARE ARRANGED ONLINE. THEY HAVE A DEFINITE PAY BACK
BECAUSE IT COMES OUT OF YOUR PAYCHECK AND LIMIT HOW MUCH
THEY CAN TAKE OUT OF EACH PAYCHECK, SO IT DOESN’T PUT
THEM EVEN FURTHER SO THEY GO OFF TO ANOTHER PAYDAY, BUT NEW
MEXICO HAS HAD A SCOURGE OF PAYDAY LENDING FOR SO MANY
YEARS AND 600 PAYDAY LENDERS IN THE STATE. THEY ARE POORLY REGULATED
BECAUSE THE BANKING END OF THE REGULATION AND LICENSING HAS
VERY FEW PEOPLE AND THEY DO PAYDAY LENDERS, ATM’S, STATE
CHARTERED BANKS AND THEY HAVE LIKE, I BELIEVE, 10 PEOPLE.>>THEY DO ALL OF THE ATM’S. THEY EVEN MONITOR ATM RATES. SO, WE DON’T HAVE THE
INFRASTRUCTURE TO REGULATE PAYDAY LENDERS AND IF YOU HAVE
SMART PEOPLE IN THE CITY AND IT IS A GOOD COMPANY BUT IT
HAS TO BE MONITORED.>>ED, IT IS ALMOST LIKE I
DON’T WANT TO CHALLENGE THE LIEUTENANT GOVERNOR TOO
SHARPLY BUT IT SEEMS LIKE GOVERNMENT SANCTIONED HIGH
INTEREST LOANS AT 25% THAT PERHAPS WE HAVE GOTTEN SOFTER
ON THIS IDEA, THE IDEA OF 75%, 200%, SO MUCH. SUDDENLY 25% SOUNDS LIKE, YOU
KNOW, BUT IS THAT THE RIGHT APPROACH? YOU KNOW. 25%, SUDDENLY IS A DEAL
SOMEHOW.>>THE QUESTION REALLY IS WHAT
IS GOVERNMENT’S ROLE AS EMPLOYER FOR EMPLOYEES. IS THIS APPROPRIATE FOR THIS
TO TAKE PLACE? WE COULD HAVE COMPASSION FOR
THOSE WHO RUN INTO FINANCIAL HARD TIMES BUT WHAT ARE THE
OTHER COMPONENTS THAT MIGHT BE ASSOCIATED WITH THOSE
EMPLOYEES WHO FIND THEMSELVES DEEP IN DEBT EVEN FOR A SHORT
PERIOD OF TIME. IS THE CITY OR THE MUNICIPAL
GOVERNMENT ENTITY OFFERING — WHAT DO YOU CALL IT? FINANCIAL LITERACY COURSES
AND. FINANCIAL LITERACY COURSES
THAT WAS ONE OF OUR EXPECTATIONS IF YOU WERE GOING
TO TAKE OUT A STUDENT LOAN YOU PROBABLY GOT TO TAKE ONE OF
THOSE COURSES. SO THE QUESTION IS IS THIS THE
PLACE FOR GOVERNMENT TO BE IN THE LOAN BUSINESS?>>YOU ASK THAT QUESTION, I
APOLOGIZE TO YOU AND EVERYONE AND REVIEWERS I KIND OF
CHUCKLED THERE BECAUSE I HEARD TENNESSEE ERNIE SINGING THE
COMPANY STORE. IT ALMOST SOUNDS LIKE THIS IS
WHAT IS GOING ON. IT IS THE COMPANY STORE. NOT THAT BAD BECAUSE OBVIOUSLY
THE CITY IS NOT TAKING A HUGE CUT OUT OF IT.>>THIS MIGHT BE AN
APPROPRIATE PLACE FOR — I HAD THE SAME THOUGHT. DAVID INTERESTINGLY ONE OF THE
METRICS THAT POPPED OUT IN REPORTING THAT COLLEEN DID IS
THE FOLKS TAKING OUT THE LOANS, LIEUTENANT GOVERNOR
MENTIONED, ABOUT 1900 IS AVERAGE. SO, THE AVERAGE SALARY OF
THOSE TAKING THESE LOANS IS 41 GRAND AND 45 GRAND.>>RIGHT. SOME FOLKS MIGHT SAY THAT IS
PRETTY GOOD DOUGH AROUND THESE PARTS. BUT WHAT DOES THAT SAY THAT
EVEN IF YOU PULL IN THAT KIND OF MONEY, I WILL ASSUME WITH A
HEALTH PLAN, OF COURSE, YOU’RE WORKING FOR THE CITY SO YOUR
MONEY NOT GOING OUT THE DOOR THAT WAY. WHAT DOES THAT SAY ABOUT HOW
VULNERABLE PEOPLE CAN BE?>>WE HAVE TO LOOK AT THIS IN
THE OVERALL FINANCIAL HEALTH OF THE AVERAGE AMERICAN
CONSUMER. THEY DID A SURVEY, AVERAGE
AMERICAN HOUSEHOLD DOES NOT HAVE 400 IN CASH FOR AN
EMERGENCY. THEY HAVE TO BORROW IT, THEY
HAVE TO SELL SOMETHING, USE A CREDIT CARD. AND I THINK IF WE LOOK AT THAT
WE HAVE AN ECONOMY THAT IS HOSTILE. IT IS A TOUGH ECONOMY. IF YOU’RE A MUNICIPAL EMPLOYEE
YOU MAY NEED THAT LOAN AND I THINK TO SOME CREDIT,
MUNICIPALITIES THIS PROGRAM SET WE HAVE EMPLOYEES THAT ARE
GOING TO NEED THIS PROGRAM, LET’S GET THEM THE PROGRAM,
PROTECTING THEM FROM A HIGHER INTEREST RATE. THE BIGGER QUESTION IS WHAT
ARE WE GOING TO DO FOR THE AMERICAN ECONOMY SO PEOPLE ARE
NOT IN THIS SITUATION. THE LITTLE GUY IS IN DISTRESS. HE HAS BEEN IN DISTRESS FOR 30
YEARS. LET’S FIX IT. LET’S MAKE IT SO THAT
PEOPLE — MY FATHER RAISED FOUR KIDS, PUT EVERYBODY
THROUGH COLLEGE. YOU COULD NOT DO THAT TODAY
AND I THINK WE NEED TO LOOK AT THE BIGGER PICTURE, STOP
DESCRIBING THE PROBLEM, LET’S LOOK FOR THE SOLUTION, HOW DO
WE GET MORE HOUSEHOLDS MORE MONEY.>>I HAVE ANOTHER QUESTION. WE ALSO HAVE THE SITUATION, WE
HAVE UPPER TIER FOLKS IN OUR CITY GOVERNMENT JUST GOT A
COUPLE RAISES, AND SOME REALLY GOOD ONES, AS A MATTER OF
FACT, AND 2% RAISE AS MANDATED BY THE LEGISLATURE, EVERYBODY
GETS A RAISE, THEN A WHOLE BUNCH ON TOP OF THAT BUT
MEANWHILE THEY ARE OFFERING LOWER SALARY FOLKS ALMOST
PAYDAY LIKE LOANS. SOMETHING DOESN’T SEEM QUITE
IN BALANCE THERE. HOW DOES THAT STRIKE YOU?>>I READ THE PAPER THIS
MORNING AND I WENT, OH, GEEZ. YOU KNOW. IT IS KIND OF, TWO THINGS, ONE
IS IT SEEMS TO ME THAT, WELL, YOU KNOW, WITH ALL THE MONEY
THAT WE HAVE, A 2% RAISE — NOW THIS WAS COMING FROM THE
LEGISLATURE. THAT WASN’T THE CITY 2%. BUT, 2% IS NOT VERY MUCH WHEN
YOU LOOK AT 45,000 A YEAR. IF EVERYBODY DOESN’T HAVE OR
MOST PEOPLE DON’T HAVE THE $400 TO HANDLE AN EMERGENCY OR
WATER HEATER OR SOMETHING LIKE THAT, THEN IT IS A PROBLEM AND
THIS MAY BE — HAVING HEARD MANY STATISTICS AND SAT IN ON
COMMITTEES ABOUT PAYDAY LENDING, I MEAN WE ARE
TALKING — WE ARE NOT TALKING 25%. WE ARE TALKING 300% FOR PAYDAY
LOANS. SO 25% IS CERTAINLY GOING IN
THE RIGHT DIRECTION BUT MY BIGGEST CONCERN IS WE ARE
CREATING GOVERNMENT BANKS AND I AM VERY MUCH A PRIVATE
ENTITY PERSON. THE ONE THING I WANTED TO
MENTION IS U.S. BANK IS OFFERING A PAYDAY LOAN OR A
SIMPLE LOAN. THEY HAVE CAPPED THEIR APR AT
70%. NOW, THAT CERTAINLY IS MORE
THAN 25% BUT IT SURE BEATS THE HECK OUT OF 375%, SO —
>>HOLD YOU THERE. WE ARE OUT OF TIME. INTERESTING FOOTNOTE BECAUSE
ED IS ON TO SOMETHING ABOUT THE UNION. THERE IS SOMETHING THERE ABOUT
THAT THAT COULD USE ATTENTION BUT THIS IS AN INTERESTING
PROGRAM. WE’LL SEE HOW IT GOES. OUT OF TIME. THANKS TO YOU ALL. SEE YOU NEXT TIME.

Leave a Reply

Your email address will not be published. Required fields are marked *