Free Americans Proclaiming Total Emancipation and Working Towards
Democracy.
U.S. Troops'
Long-Term Debts in Return
For Short-Term
Cash from "Payday Loan" Stores
Date: Tue, 27 Dec 2005 05:27:37 +1000 From: Peter Marshall
<[EMAIL PROTECTED]>
http://www.boardwebhost.com/gotanswers/viewtopic.php?
t=886&start=0&postdays=0&postorder=asc&highlight=
Loans Strap G.I.s
Thousands in Heavy Debt as 'Payday' Firms Rake It In
By RICHARD SISK
DAILY NEWS WASHINGTON BUREAU
http://nydailynews.com/business/v-echo/story/377829p-320905c.html
WASHINGTON - More than 100,000 U.S. troops have been saddled with
long-term debt
in return for short-term cash from "payday loan" stores charging
interest rates
that would make the mob blush.
And the loan industry's powerful lobbyists, both Democratic and
Republican, are
fighting hard to keep the interest windfalls, which in at least one
case topped
500%, the Daily News has learned.
"The troops get roped into it and they can't get out; it becomes a
spiral," said
Joyce Raezer of the National Military Families Association.
But spokesmen for the industry argue that stores with names such as
Planet Cash
offer a service "bridging the gaps between paydays" that banks, credit
unions
and the military can't or won't provide - same-day loans to troops who
are
credit risks.
At a typical payday store, a borrower would show a pay stub and proof
of a bank
account to borrow $100 for a charge of $120. The borrower writes a
check for
$120 and postdates the check to his next payday.
After two weeks, if the borrower can't pay, the loan is rolled over for
another
$20, and Pentagon officials said most troops go through four or five
rollovers.
Army Chief Warrant Officer Thomas Burden, who is now serving in Iraq,
told
Congress he paid back $1,400 on an original loan of $300.
"It just kind of keeps snowballing if you don't have the money to cover
it,"
said Burden, 35.
In a letter supporting congressional efforts to curb the payday
business, David
Chu, the undersecretary of defense for personnel, estimated that 7% of
the
active-duty military, or 100,000 troops, used the loans, but consumer
groups
said the number could be as high as 20%.
While complaining about "predatory lenders," the military also has
failed to
control the business, the Government Accountability Office, the
investigative
arm of Congress, found.
In a report last spring, the GAO urged commanders to consider declaring
the
payday stores off-limits to troops and stopping the stores from
advertising in
base newspapers.
The Community Financial Services Association, the trade group for the
booming
$40 billion payday business with 22,000 U.S. outlets, rejected the
charges of
predatory lending.
"It's so easy to demagogue," said association spokesman Steve Schlein.
"We
provide a product people are begging for."
If the military objects to payday loans, Schlein added, "Then why don't
military
credit unions offer short-term loans?"
Several bills have been introduced in Congress to rein in payday loans
to the
military, but the financial group has marshaled platoons of former
Republican
and Democratic officials to lobby against the legislation.
The dispute has put old friends at odds. Sen. Hillary Clinton (D-N.Y.)
has been
pushing for limits and co-sponsored an amendment added to the defense
spending
bill to educate troops on personal finance.
Pushing back has been Maria Echavaste, a deputy chief of staff to former
President Bill Clinton and now a lobbyist for the financial services
group.
Originally published on December 25, 2005
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