This follwoing report from National individuals Action traces connections involving the payday lenders that are largest and Wall Street banking institutions, including funding arrangements, leadership ties, assets, and shared practices. Listed below are a few of the reportвЂ™s findings that are key
Pay day loan organizations rely greatly on financing from big banking institutions, including
Wells Fargo, Bank of America, and JPMorgan.
* Big banks provide $1.5 billion in credit to publicly held loan that is payday,
as well as a predicted $2.5-3 billion into the industry all together.
* Wells Fargo funds more payday loan providers than just about other bank that is big six regarding the
eight biggest payday lenders. Bank of America, JPMorgan Chase, and United States Bank
additionally fund the operations of major payday lenders. Bank of America and Wells
Fargo offered critical early funding to your payday lender that is largest, Advance
America, fueling the growth for the industry.
* Publicly traded payday loan providers paid nearly $70 million in interest cost on
financial obligation in ’09 вЂ“ a sign of exactly just how much banks are profiting by extending credit to
* Some banks usually do not lend to payday loan providers because of risks that areвЂњreputationalвЂќ
from the industry.
Numerous companies that are payday strong ties to Wall Street.
* Two Bear Stearns professionals guided the rise of payday lender Dollar Financial,
and two Goldman Sachs professionals sat regarding the companyвЂ™s board when it went
* Advance AmericaвЂ™s professionals and board users have actually ties to Bank of
America, Morgan Stanley, and Credit Suisse.
* Bank of America and its own subsidiaries very very own significant stakes (significantly more than 1%) in
four of this top five publicly held payday loan providers: Advance America, EZCORP,
Money America, and Dollar Financial.
Payday financiers are major bailout recipients, and proceeded to give credit to
payday lenders through the crisis that is financial after the bailouts.
* Big banks financing major payday lenders received $105 billion in TARP funds in
belated 2008. Bank of America received $45 billion, and Wells Fargo and JPMorgan
gotten $25 billion each. Big banking institutions proceeded to negotiate and amend credit
agreements with payday loan providers through the entire crisis that is financial following the
* Two lenders that are payday EZCorp and money America, utilized loans negotiated with JP
Morgan and Wells Fargo and soon after the bailouts buying pawn store chains
in Las Vegas and Mexico.
Big bank funding of payday lending resulted in the increase of the effective industry lobby
that has effectively battled efforts to cap interest levels.
* several lenders that are payday dominating the industry within the belated nineties on the
power of bank funding. These loan providers formed a effective lobbying team, the
Community Financial Services Association, which includes invested $11.3 million on
federal lobbying efforts since its inception in 1999.
* Major payday lobbyists also lobby for monetary organizations such as for instance Morgan
Stanley, Fitch Reviews, Visa, Blackstone Group, the funds that are managed
Association, plus the Equity that is private Council. One lobbyist, Wright Andrews, was
formerly a lobbyist that is major the subprime mortgage industry.
A nationwide rate of interest limit of 36% would effortlessly place payday loan providers away from
company, relating to Advance AmericaвЂ™s disclosure filings, but this kind of cap
didn’t gain traction throughout the reform that is financial because of the clout for the
financial industryвЂ™s lobby.
You can find signs that the lending that is payday will expand as time goes on.
вЂў Big banks such as for instance Wells Fargo, US Bank, and Fifth Third are actually providing brand brand new
payday loan-style items. Called advance that isвЂњchecking products, these shortterm
loans carry interest levels as high as 120percent.
вЂў Some Wall Street analysts genuinely believe that the industry will develop last year as
financially-stretched borrowers have actually increasing difficulty credit that is securing.
The industry can be predicted to keep expanding into pawn lending and
other solutions, such as prepaid debit cards.
вЂў Bank of America and Goldman Sachs are leading an IPO for prepaid
debit card issuer NetSpend, which lovers with numerous payday loan providers and is