Thanks to NC’s budget, unemployment back on the rise

After the 2010 election cycle, the republicans took over the majority in the house and senate.  During their campaigns they made lots of promises about creating jobs.  In practice they did the opposite.  The big item during the session was the state budget and dealing with the shortfall.  It seemed like from the beginning, they were more focused on cutting out state into the past than they were about creating jobs and moving our state forward.

In fact, it seemed like at every opportunity during the budget debate, they did more to hurt jobs.  They attacked tax credits like the state eitc and the child care credit, that encourage low-income families to work.  They seemed to want to cut every environmental program and had their hearts set on defunding Planned Parenthood.  They wanted to increase rates on small finance loans, and roll back the financial protections the state has become known for.  With all this, it seemed they were more concerned with turning back time and less concerned with creating jobs for the future.

What they did do was ignore calls to take a balance approach to the budget, and chose to make severe cuts rather than some cuts and increased revenues.  The latest unemployment numbers begin to show that.  All the cuts in state government meant cutting lots of jobs or eliminating positions that had yet to be filled.  As a result, there were over 10 thousand fewer jobs available in June.  This may be only the beginning as more agencies make cuts going forward, more jobs will have to be cut.

I fail to see how they delivered on promises of job creation, but see plenty of evidence of eliminating jobs.  They seemed more focused on undoing the work of the past and this holds an eerie resemblance to how republicans in D.C. handled their new-found power.  Less about solving problems and more about a undoing the past.


Finance companies finally have their day

Today in the House Banking Committee the finance companies finally had their day.  House Bill 810 was thrown on the calendar yesterday at the last moment for a committee vote.  I think that it was planned this way.  The bill sponsors and the committee chair did not want the Military to be in the room and did it this way to make that happen.

The vote was pretty much along party lines with the a 15-6 vote for a favorable report out of committee.  The one Democrat who strayed was a bill sponsor.  I have to say that I am disappointed in Rep. Kelly Alexander, Jr.  This was an opportunity to stand up to industry and continue NC along the path of being a great state for consumer protections and being against predatory lending.

I was confused by his logic to support the bill.  When he spoke today, he kept going to the point about these loans being a way for people to access credit and that we should not be taking away that option.  Somewhere along the way the industry has confused him on the point of this bill.  In no way were opponents of this bill saying to banish these loans.  This bill wasn’t even about that.  The point of this bill was to increase fees and change the bracket structure for interest rates.  Increasing the levels that interest rates applied to and raising fees is simply away to make more money off the customers you already serve.

Rep. Alexander never once addressed that in any of his statements.  I am not sure where he made the connection between his logic and the point of the bill.  I don’t want to call the man incompetent, so I will just say he is confused.  What made me the most angry about his statements were his comments about the poor.  He rightly mentioned how the poor are the people most affected by this bill.  However, he was wrong in saying that the poor were not represented in the room.  There were countless advocacy groups in the room all who are opposed to the bill.  He made a statement about the poor not being organized and not having a voice.  The last time he checked there wasn’t an organization representing the poor.  I guess he forgot about groups like the NC Justice Center, Community Reinvestment Association of NC, Center for Responsible Lending, NC Housing Coalition, Action NC and other groups that were in the room.

He clearly doesn’t pay attention to what happens in his own district (Mecklenburg County) if seriously thinks the poor do not have a voice. Or maybe he thinks these loan companies are the voice of the poor since they service them.  Regardless, I found his statements about the poor and support of this bill troubling.  I hope that the people in his district make him realize more than ever that the poor have a voice.

I do think in all this that the advocates made a calculated mistake.  I don’t think that so much emphasis should have been put on the military opposition.  While that was important, I believe it would have been more effective with the voices of all the other groups against it.  However, even with that being the case, I cannot understand how a bill opposed by every consumer advocacy group, military, AG’s office and the Department of Justice could make it out of committee.  The only groups supporting this bill are those who are set to increase their profit margins on the most vulnerable people in the state.

My final thought on the issue deals with consumer protections. Some of the supporters of the bill spoke about this being a step in the right direction for consumer protections in this industry.  There was a small provision in the bill that makes it illegal to push customers to a new loan before they have paid off their current loan by 50%.  I think that is a good measure.  It slows the process of these companies who like to up sale and refinance their customers into bigger loans.  Seriously though, how can you combine that with a rate and fee hike and still call it consumer protections?  Since when does raising rates and fees equate to consumer protections?  Aren’t consumer protections supposed to protect consumers from predatory practices like that?

Hopefully, people come to their senses when the bill hits the floor and stop this bill in its tracks.

Military gives the smack down to consumer finance companies!

Last week, when H810 (Consumer Finance Act Amendments) finally got its day in committee, things didn’t go the way industry planned.  They were confident that they had the votes to get this out of committee and on to the floor.  They were unprepared for what was to take place.  Several military officials were in the building to oppose this bill as being bad for military families.  In what I believe is the highest ranking military official to make a presence in the General Assembly, Col. Stephen Sicinski, garrison commander at Fort Bragg, made his presence felt.  He clearly articulated the military opposition to this bill and his presence, I believe, delayed a vote on the bill.  I don’t think that any member of the house banking committee who supports the bill wanted to be seen voting for the bill in his presence.

That day in committee the industry offered a shorter substitute bill that took out the provision to raise rates.  Instead, they are now asking to increase the maximum loan amount to $15,ooo from its current $10,ooo limit.  They also want to increase the loan level brackets that rates apply too.  For example , currently you can charge up to 36% on the first $600, they want to increase that to the first $1,500.  Subsequently, all the brackets after that will increase as well.  They also want to increase the max fee for loans up to $2,000 to $100 and add a handling fee of $3 per month for every $100 that is borrowed.  All this seems like cost increases to me, even though the industry in their presentation hammered home the point that interest rates stay the same.  While that is true, the rates would now apply to a broader dollar amount making the loan more costly.  When you add in the fee hike and the new handling fee the true cost of the loan has grown significantly.

The industry likes to talk about how this increase is needed because loans from $0 – $1,000 have decreased, because they are not profitable.  What they don’t like to mention is that loans between $1,000 and $3,000 have increased, because they like to up sell their clients.  That lines up with their desire to increase brackets for which interest rates apply.  The industry is trying to pull one over, but the military sees through it.

After the meeting, Col. Stephen Sicinski, was asked if he was being unfair to describe these installment loans as payday loans.  He admitted that probably was unfair since these are installment and not tied to a paycheck.  However, he was right with his next point, which was while that may be an unfair comparison the bottom line is that they are all predatory.

Here is some of the press around the state on this issue:–.html

When 54% APR is not enough

Cross post of my posting from

Despite the fact that consumer finance companies have been profitable over the last few years, they want more.  Small consumer loan companies like Citifinancial and American General (owned by AIG) already charge up to 54% APR, but they want more of your money.  House Bill 810 will allow for new fees which will raise the APR up to 100%.  Industry insists they are being treated unfairly and need the increases to stay profitable.  Heading into this session the Commissioner of Banks issued a report with the recomendation that no changes were needed for finance companies.

These companies financials show that they have been profitable at the current rate and fee schedule.  I guess they have not taken enough money out of the hands of working families in NC.  These companies are dominated by out of state lenders who want to increase their profit margins in the state.  Repeat business is what this industry hangs it hat on.  They like to talk about customers being satisfied and prefering to work with them over their bank.

If you care so much about the repeat business why do you want to raise the cost of loans to your current customers.  That seems like a great way to repay them for their loyalty.  Let’s take more of your money, we want to charge you more for the loans you already get from us.  This seems like a strange message to convey to your clients.

In a recent debate at the General Assembly, the industry lobbyist admitted that the cost of loans will go up if this bill passes.  I guess this is the sign of the times going forward.  Business need to tell clients that even though we are profitable we want more of your money.