The Honorable Scott M. Stringer Comptroller, Nyc One Centre Street Nyc, NY 10007
Dear Comptroller Stringer:
The organizations that are undersigned one to instantly and permanently divest ny CityвЂ™s retirement funds from payday lending businesses вЂ“ whose loans are categorically unlawful in nyc. City pension funds invested significantly more than $20 million in payday high-cost and lending installment financing organizations in 2016. Furthermore, 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 therefore the Check Cashing Store.
Spending general public retirement funds in disreputable payday lending organizations raises a primary conflict for the City. Not just do these businesses make triple-digit rate of interest loans which can be unlawful in ny, but the majority of those have already been the topic of enforcement actions for flagrant violations of this legislation; mistreated clients; and encountered allegations of misleading and defrauding investors вЂ“ including pension that is public вЂ“ in states where these are generally allowed to work.
Among the list of investments : в—Џ money America Overseas, Inc. and EZCORP, Inc. have now been 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 houses 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 laws and regulations. в—Џ World Acceptance Corp. is under research by the CFPBv since March 2014 to find out perhaps 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 associated with the payday that is online CashNetUSA, ended up being discovered to possess gotten the absolute most consumer complaints among all payday lenders,vii based on the CFPBвЂ™s customer grievance database. в—Џ DFC Global, Inc. ended up being sued by way of a general general general general public retirement investment from the grounds it вЂњmisrepresented to investors that  it complied with federal government laws and guidance pertaining to reckless financing methods, and  that the business made вЂprudent,вЂ™ вЂconservative,вЂ™ and вЂresponsibleвЂ™ underwriting decisions when coming up with loans.вЂќviii
We think these assets pose reputational, appropriate, regulatory and financial dangers, and therefore you’ve got an ethical and obligation that is fiduciary divest.
Ny is among the 15 states, plus D.C., where strong state usury laws and regulations and enforcement efficiently ban payday lending. brand brand brand brand brand brand New YorkвЂ™s usury laws and regulations are among the list of strongest within the country, capping rates of interest at 25% APR. By way 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 doesn’t also add bank overdraft charges and other fallout that is economic payday advances.
In states where in actuality the payday financing industry is allowed to use, individuals struggling to have from paycheck to paycheck are methodically targeted for high-cost loans they can’t pay for. Payday loan providers charge exorbitant costs and interest that is shockingly high вЂ“ typically between 300% and 400% APR. The lending that is payday model is centered on loan-flipping, as borrowers typically must refinance or move over their loans вЂ“ frequently multiple times вЂ“ ensnaring them in a long-lasting period of financial obligation. Studies have shown that communities of color are disproportionately targeted for those debt-trap loans.x
Regardless of the clear advantages of banning payday loan providers along with other fringe financial services businesses have actually for many years forced legislation in Albany that will legalize high-cost predatory lending in nyc. Those efforts have already been beaten because of tireless advocacy by a statewide coalition of civil legal rights, faith-based, work and community teams.
This present year, lawmakers once once once again reaffirmed brand brand brand brand brand New YorkвЂ™s commitment that is longstanding maintaining payday advances away from our state by rejecting a few billsxi вЂ“ supported by effective passions like brand brand brand brand New YorkвЂ™s check cashing payday loans Maryland industry and a California-based вЂњfintechвЂќ corporation вЂ“ that will have inflated New YorkвЂ™s usury rules 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 very least six associated with the countryвЂ™s largest payday and installment that is high-cost вЂ“ money America Overseas, Inc., Enova Overseas, Inc., EZCORP, Inc., 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 assets fly when confronted with 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 down on unlawful lending that is payday issuing warnings to loan companies it was unlawful to gather on pay day loans in Nyc; directing payday lenders to avoid making unlawful pay day loans to Nyc State residents; and contacting banking institutions and their re re re payments processors to cease permitting payday loan providers to gain access to New YorkersвЂ™ bank reports. Ny has additionally acquired contract through the credit that is national to stop reporting unlawful pay day loans on New YorkersвЂ™ credit file.
Nyc has made crucial strides toward financial equality and possibility recently. Just last year, for instance, the worker-led вЂњFight for $15вЂќ motion won a landmark enhance to your stateвЂ™s minimal wage. And though we’ve way more work ahead, bankrolling a business that methodically exploits employees, retirees, yet others struggling to have by and strips wide range from low-income communities and communities of color threatens not just to undercut those gains вЂ“ its an affront to ny values.
A year ago, nj-new jersey, that also efficiently bans lending that is payday offered its pension investment opportunities in an exclusive equity fund that held Ace Cash Express, another of this nationвЂ™s biggest payday lenders.xii Commenting regarding the stateвЂ™s divestment with this lending that is payday, the president of this nj State Investment Council claimed, вЂњThe bright line is whatвЂ™s legal to accomplish and whatвЂ™s maybe maybe perhaps maybe maybe maybe not appropriate to complete when you look at 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) academic Fund, Inc. DД“mos Fordham Law class Feerick Center for personal Justice trusted old fashioned Lower East Side (GOLES) Housing Court Answers, Inc. Housing and Family Services of better ny, 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 ny State retirement funds.