The Honorable Scott M. Stringer Comptroller, Nyc One Centre Street Nyc, NY 10007
Dear Comptroller Stringer:
The organizations that are undersigned one to straight away and permanently divest ny CityвЂ™s retirement funds from payday lending businesses вЂ“ whose loans are categorically unlawful in ny. City pension funds invested a lot 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 while the Check Cashing Store.
Spending pension that is public in disreputable payday financing quick personal loans West Virginia 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 ny, but the majority of these have already been the main 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 typically allowed to use.
One of the investments : в—Џ money America Overseas, Inc. and EZCORP, Inc. have already been the topics of major enforcement actions by the customer Financial Protection Bureau (CFPB) for illegally robo-signing documents, 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 rates of interest that surpassed 1,000per cent to Pennsylvania residents,iv in breach of PennsylvaniaвЂ™s customer security rules. в—Џ World Acceptance Corp. happens to be under research because of the CFPBv since March 2014 to ascertain perhaps the companyвЂ™s exploitative business practicesvi come in breach regarding the customer Financial Protection Act, the reality in Lending Act, as well as other federal customer economic laws and regulations. в—Џ Enova Overseas, Inc., operator associated with online payday loan provider CashNetUSA, had been discovered to own gotten probably the most consumer complaints among all payday lenders,vii based on the CFPBвЂ™s customer issue database. в—Џ DFC Global, Inc. had been sued by way of general general general general general public retirement investment in the grounds so it вЂњmisrepresented to investors that  it complied with government laws and guidance pertaining to reckless financing techniques, 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’ve got an ethical and obligation that is fiduciary divest.
Nyc is among the 15 states, plus D.C., where state that is strong legislation and enforcement efficiently ban payday lending. brand brand brand New YorkвЂ™s usury rules are among the list of strongest into 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 will not also add bank overdraft charges and other fallout that is economic payday advances.
In states in which the payday financing industry is allowed to use, individuals struggling to obtain from paycheck to paycheck are methodically targeted for high-cost loans they are unable to pay for. Payday loan providers charge extortionate charges and interest that is shockingly high вЂ“ typically between 300% and 400% APR. The lending that is payday model is based 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 of these debt-trap loans.x
Inspite of the clear advantages of banning payday loan providers along with other fringe financial services businesses have for a long time pressed legislation in Albany that could legalize high-cost predatory lending in nyc. Those efforts have already been beaten by way of advocacy that is tireless a statewide coalition of civil liberties, faith-based, work and community teams.
In 2010, lawmakers once once once once again reaffirmed brand brand 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 will have inflated brand brand New YorkвЂ™s usury laws and regulations 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 for the countryвЂ™s largest payday and high-cost installment lenders вЂ“ money America Global, Inc., Enova Global, 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, a personal equity investment that has a few notorious predatory financing organizations, like 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 payday financing out of our state. New YorkвЂ™s enforcement agencies, for instance, have actually cracked straight straight straight straight straight down on unlawful payday lending, issuing warnings to collectors it was unlawful to gather on payday advances in Nyc; directing payday lenders to avoid making unlawful payday advances to Nyc State residents; and contacting banking institutions and their re re re payments processors to quit enabling payday loan providers to gain access to New YorkersвЂ™ bank reports. Nyc has additionally acquired contract through the nationwide credit reporting agencies to stop reporting unlawful pay day loans on New YorkersвЂ™ credit file.
Nyc has made strides that are important financial equality and possibility recently. A year ago, for instance, the worker-led вЂњFight for $15вЂќ motion won a landmark enhance to your stateвЂ™s minimal wage. And al though we’ve a lot more work ahead, bankrolling a business that methodically exploits employees, retirees, yet others struggling to obtain 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.
This past year, nj, that also effortlessly bans lending that is payday offered its pension investment assets in an exclusive equity fund that held Ace Cash Express, another for the nationвЂ™s biggest payday lenders.xii Commenting from the stateвЂ™s divestment with this payday home loan company, the president for the nj State Investment Council claimed, вЂњThe bright line is whatвЂ™s legal to complete and whatвЂ™s perhaps maybe maybe perhaps perhaps not appropriate to complete 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 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 ny State retirement funds.