Updates:

June 11, 2010

Minutes of the 5/26/10 MFSA Annual Membership Meeting and Industry Update:  [link here]

June 18, 2009

From: Shevin, Maury
Sent: Thursday, June 18, 2009 11:08 AM
Subject: FW: Economic Impact of the Payday Lending Industry - Final

Members and Friends of MFSA: Attached is an important study that addresses the economic impact of payday lending in the USA. I urge you to review it and share with your Members of Congress and State Legislators. Thanks. Maury

To: CFSA Board

From: Rebecca Adler

Subject: Economic Impact of the Payday Lending Industry Release

CFSA will release findings of the economic impact study to 3,000 reporters tomorrow through CapWiz. We will issue a news release just prior to the Gutierrez mark up that will put the economic impact study in context with what's at stake by over regulating.

State facts sheets will also be made available and state leaders/PR firms in key states will be asked to assume responsibility for publicizing the numbers while Dezenhall will work states without PR support.

Click here to view the full report.

June 9, 2009

Friends of MFSA --  You may find the attached video helpful.


Subject:    View Video with Excellent Explanation of APR and Pass it On!   


Check 'N Go has posted a great video on YouTube that really nails the issue of an APR as it applies to short-term credit products.  You can help raise the video's search engine ranking by viewing and then sending to everyone you know including media contacts and lobbyists.  Pass it on!  


http://www.youtube.com/watch?v=mSWnN9BAol8&eurl=http%3A%2F%2Fwww.prweb.com%2Freleases%2F2009%2F06%2Fprweb2476884.htm&feature=player_embedded    


Maury Shevin

April 3, 2009

Feruary 26, 2009

A cost comparison of payday loan alternatives has been updated with the latest and greatest numbers. It is available for download here.

Payday Advance: A Cost Comparison of the Alternatives

Consumer groups and academic researchers agree: Payday advance fees are lower than many of consumers' alternatives, even when expressed as an annual percentage rate (APR).

Cost comparison chart

Jonathan Zinman, Dartmouth College: "Most substitution [for payday loans] seems to occur through checking account overdrafts of various types and/or late bills. These alternative sources of liquidity can be quite costly in both direct terms (overdraft and late fees) and indirect terms (eventual loss of checking account, criminal charges, utility shutoff)."

Sheila Bair, Current Chair, FDIC: "When used on a recurring basis for small amounts, the annualized percentage rate for fee-based bounce [overdraft] protection far exceeds the APRs associated with payday loans."

Federal Deposit Insurance Corporation: "...a customer repaying a $20 POS/debit overdraft in two weeks would incur an APR of 3,520%; a customer repaying a $60 ATM overdraft in two weeks would incur an APR of 1,173%; and a customer repaying a $66 check overdraft in two weeks would incur an APR of 1,067%."

Coalition of 90 Consumer Groups: "Unlike payday lending programs, the extraordinarily high APRs in fee-based overdraft programs are never disclosed as such, and none of the other consumer protections are provided. Moreover, fee-based overdraft programs are aimed at the very same customers that payday lenders are seeking...and the costs rival or exceed those of payday lending."

Jean Ann Fox, Consumer Federation of America: "If a bank lends you $100 and charges you a $20 fee -- and then you pay the money back in two weeks -- that's an annualized interest rate of 520%. It's worse than a payday loan."

February 23, 2009

Bank and Credit Union Fees: In States without Payday Lending, Consumers Pay More

Nationally, the average American household with a bank or credit union checking account pays $368.51 each year in overdraft protection (ODP) or non-sufficient funds (NSF) fees.

February 3, 2009

• Bank and Credit Union Non-Sufficient Funds (NSF) and Overdraft Protection (ODP) Fees
  An estimated 1.28 billion separate check and electronic non-sufficient funds transactions occur annually1. With an average fee of $28.952 per transaction, consumers pay an estimated $37 billion annually in NSF/ODP fees. If a check is "bounced" and not covered by the bank or credit union, consumers pay an additional average merchant returned check fee of $26.64.
• Credit Card Penalty Fees (Late fees, over-the-limit fees)
  Credit card companies broke all records in 2008 for late fees, over-limit charges, and other penalties, pulling in more than $19 billion.
• Storefront Payday Loans
  With an average loan of $300 and a typical fee of $15 to $17 per $100, storefront payday lenders collected an
  estimated $6.8 billion in fees in 2007.
• Internet Payday Loans
  Internet payday lenders collected an estimated $1.8 billion in fees in 2007.6 Unregulated off-shore lenders have access to consumers' bank accounts and charge up to $30 per $100 borrowed.

August 5, 2008

Members and Friends of Modern Financial Services Association of AL:

The Fair and Accurate Consumer Transactions Act Amendments to the Fair Credit Reporting Act ("FCRA") required the Federal Trade Commission ("FTC") and other federal agencies to issue joint regulations and guidelines regarding the detection, prevention and mitigation of identity theft.  Under the final rules, creditors that offer or maintain "covered accounts" must develop and implement a written Program. 
A "covered account" is (1) an account primarily for personal, family, or household purposes that involves or is designed to permit multiple payments or transactions, or (2) any other account for which there is a reasonably foreseeable risk to customers from identity theft.  Deferred Presentment Lenders do not offer accounts with multiple payments.  However, because of the breadth of the second part of the definition, almost every installment retail sale for a consumer purpose as well as consumer loan, will result in a "covered account."
Thus, this new Regulation does apply to Alabama's Deferred Presentment Licensees.
A part of the Regulation addresses only users of consumer reports who discover or are informed of address discrepancies.   Another part addresses only debit and credit card issuers.   However, while these parts of the Regulation do not necessarily apply to all creditors, the detection, prevention and mitigation component does apply to all consumer creditors and payday lenders.
The final rule provides that the "Program" to be adopted by the creditor must be tailored to the creditor's size, complexity and operations.
The Regulations also enumerate certain steps that creditors must take to administer their Programs, including obtaining approval of the initial written Program by their board of directors or a committee of the board, ensuring oversight of the development, implementation and administration of the program, training staff, and overseeing service provider arrangements.
There is detailed guidance  provided in the Rule's Appendix  Each creditor must consider the guidelines and include in its Program those guidelines that are appropriate to its Program.  Illustrative examples of Red Flags are listing in a supplement to the guidelines.  Thus, we have a new FTC Trade Regulation Rule,  a supplement to the Rule, and guidelines to the Supplement.
So, here's where we are with compliance required by November 1, 2008:
* Deferred Presentment Licensees, whether they use consumer reports or not, must comply with the new Regulations because consumer creditors maintain "covered accounts" as that term is defined in the FTC Regulation.
* Deferred Presentment Licensees must establish an Identity Theft Prevention Program designed to detect, prevent and mitigate identity theft.
* The Program, appropriate to the size and complexity of the creditor must:
        1.  identify relevant Red Flags for the types of accounts it maintains;
        2.  detect Red Flags that have been identified, when they occur;
        3.  respond appropriately to any Red Flags that are detected by it, to prevent and mitigate identity theft; and
        4.  be updated by the creditor periodically.  
* The Program must be continually administered by the creditor including:
        1.  approval by the Board or a committee of the Board;
        2.  involve senior management;
        3.  staff training is required to effectively implement the Program, and;
        4.  oversight of service providers.

Maurice L. Shevin, Association Director

August 5, 2008

STATS is a nonprofit, nonpartisan research organization affiliated with the George Mason University in Washington, DC. Their mission is to improve the quality of scientific and statistical information in public discourse and to act as a resource for journalists and policy makers on scientific issues and controversies.
As part of their series "Iconoclastics: breaking down the data behind popular claims", STATS has published an article titled, "Predatory Reporting" on Payday Lending?"
The article concludes, "Recent coverage of payday loans illustrates a broader tendency by the media to deal with social problems by fixating on a "villain" instead of examining the complex interaction of actors, social problems and trends. In this case, these include such factors as a lack of financial education and the ability to manage household spending and debt, as well as the broader social consequences of a political culture and economic system that emphasize individual opportunity and competition over equality and community.
Every industry contains malefactors who deserve to be exposed. But every industry is also based on incentives that need to be explained, in order to fully understand the relationship between business and consumers. It is here that the media are often sadly lacking, as the case of payday loans illustrates."
The full piece can be read at
http://stats.org/stories/2008/how_bad_payday_loans_july18_08.html.
It has been distributed by PR Newswire
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/07-22-2008/0004853428&EDATE 

Maurice L. Shevin, Association Director

July 29, 2008

Effective January 1, 2009, New Hampshire will impose a 36% rate cap on payday and title loans; and, lenders will be prohibited from making loans to borrowers who have had a payday or title loan within the previous 60 days.  Borrowers will be required to certify this fact under oath.  The law also establishes an 18-member commission to evaluate consumer lending, and access thereto in New Hampshire.  This study commission part of the law is effective now. 
Regrettably, states continue to pick apart payday and title lending.
Maurice L. Shevin, Association Director

July 21, 2008

Members and Friends of MFSA:
The American Financial Services Association reports that Senator Durbin, D-Illinois, has introduced a bill, that if it becomes law, will effectively shut down the payday lending industry in the USA.  See below:
*************************************
"As reported in today's American Banker, Senator Dick Durbin (D-IL) has introduced the Protecting Consumers from Unreasonable Credit Rates Act, which would establish a maximum Annual Percentage Rate (APR) of 36% on all consumer credit transactions, taking into account all interest, fees, defaults and other finance charges. The bill would have a far broader impact than last year's Department of Defense regulations, whose scope is limited to active duty service members and their dependents and applies to only certain types of credit.

The Durbin bill does not preempt stricter state laws, applies civil penalties for violations and empowers attorneys general to take action for up to three years after a violation. The bill has been referred to the Senate Judiciary Committee. Additional details about Senator Durbin's bill can be found here.

While the bill is not expected to advance in 2008, next year may be different. In the coming weeks, AFSA will meet with Members of Congress and their staffs to discuss the consequences of this legislation. In addition, we will encourage Congress to request a GAO study looking at the negative impact of usury laws on credit availability."
*************************************
Note that this bill is not limited to loans to military personnel and dependents.   It is an across-the-board attack on all consumer lending at rates of 36% APR and higher.  I will keep you apprised of developments.  This is not this Senator's only attack on payday lending, but it is his most recent.
Maurice L. Shevin
Association Director

March 28, 2008

On March 27, 2008, Senator Lowell Barron, Chairman of the Alabama Senate Banking Committee, introduced SB 552, which will have a marked effect on Deferred Presentment/Pay Day Lending in Alabama.  The Bill contains several amendments to Alabama's Deferred Presentment Act. 
There would be seven significant revisions to existing law:

1. The Bill does away with rollovers entirely. 
2.  The Bill establishes a right of rescission for borrowers who repay by the close of the next business day, in effect, affording customers a free 24 hour loan.
3.  Prepayment refunds would be required for prepayment of a transaction during the first 10 days, and the method of prepayment would be by the actuarial method.
4.  Licensees would be required to provide customers a statutorily required, written notice of the customer's right to request an extended payment plan. 
5.  The plan would allow a customer to repay, at no additional cost, in at least two equal installments over an aggregate term of 60 days. 
6.  Licensees would be prohibited from entering into a deferred presentment transaction with active duty military or their dependents.
7.  Certain practices would be prohibited such as marketing to those on fixed income, offering transactions to those who may not be reasonably able to repay, arranging direct deposits and using civil or criminal actions to collect from those whose only income is Social Security.

It is my understanding that the Bill has significant support in the Alabama Legislature.

Maurice L. Shevin, Association Director

March 27, 2008

This week, the U. S. Supreme Court issued an important arbitration decision. Hall Street Associates, L.L.C. v. Mattel, Inc., ___ S. Ct. ___, 2008 WL 762537 (U.S.), March 25, 2008 (arbitrator’s award not subject to judicial review for simple legal error). The United States Supreme Court once again entered the world of arbitration last week. In a dispute between Mattel as landlord and Hall Street Associates as tenant, the issue of the scope of review by the courts of an arbitrator's award, became central. The arbitrator had decided for Mattel on the basic question of whether an Oregon law was an applicable environmental law under the terms of the lease, holding that it was not. Hall Street then filed a motion with the U. S. District Court to vacate the Arbitration Order alleging that the arbitrator had committed legal error. The District Court agreed, and vacated the award. The District Court acted upon the expressed standard of review chosen by the parties in the arbitration agreement, which included judicial review for legal error. On remand, the arbitrator followed the District Court's ruling and amended the award to favor Hall Street. Each party appealed.
The Ninth Circuit reversed in favor of Mattel holding that the arbitration agreement language controlling the mode of judicial review is unenforceable and severable. The U. S. Supreme Court granted certiorari to decide whether the grounds for vacatur and modification provided by Sections 10 and 11 of the Federal Arbitration Act are exclusive.
The U. S. Supreme Court held that the grounds for review as stated in the Act are the exclusive grounds, and cannot be expanded by contract of the parties. In effect, the Court held that the often used term in arbitration agreements for judicial review of "manifest disregard" can only be a shorthand for those subsections of Section 10 of the Act, authorizing vacatur when the arbitrator is guilty of misconduct or exceeding powers. "Legal error" or simple mistake of law, in and of itself, is not grounds for vacatur. The Court noted: "'Fraud' and a mistake of law are not cut from the same cloth." The Court went on to hold, "Any other reading opens the door to the full-bore legal and evidentiary appeals that can 'render informal arbitration merely a prelude to a more cumbersome and time-consuming judicial review process'."
The Court noted that both parties claimed that a ruling against its position would cause parties to flee from arbitration if expanded review is not open to them. The Court responded, "We do not know who, if anyone, is right, and so cannot say whether the exclusivity reading of the statute is more of a threat to the popularity of arbitrators or to that of courts. But whatever the consequences of our holding, the statutory text gives us no business to expand the statutory grounds."

Maurice L. Shevin, Association Director

February 12, 2008

FDIC Selects Participants for Its Small-Dollar Loan Study

FOR IMMEDIATE RELEASE
February 5, 2008 Media Contact:
Andrew Stirling (202) 898-6688
The Federal Deposit Insurance Corporation (FDIC) today announced the selection of 30 banks to participate in a two-year pilot project to help the agency identify best practices in affordable small-dollar loan programs that can be replicated by other financial institutions.

"Our goal is to identify small-dollar loan programs that are profitable for lenders and affordable alternatives to payday loans and other high-cost loans that are harming consumers and communities across America," said FDIC Chairman Sheila C. Bair.

The selected banks are headquartered in 17 states with over 550 branches located in 27 states. Their asset sizes range from $20 million to $10 billion. A list of participating institutions is available at www.fdic.gov/smalldollarloans/participants.html.

Key features of small dollar loan programs at these banks include loan amounts of up to $1,000, payment periods that extend beyond a single pay cycle, interest rates below 36 percent, low or no origination fees, and no prepayment penalties. Many of the programs also include features such as automatic savings components, streamlined processing of loan applications, and access to financial education.

Participating financial institutions that offer these products in a safe and sound manner may receive favorable consideration under the Community Reinvestment Act (CRA).

Members of the Modern Financial Services Association of Alabama:

The Alabama Banking Department is proposing legislation that will amend the Alabama Deferred Presentment Act, the statute that regulates pay day loans in Alabama. The proposed changes are significant and if enacted, would cause licensees to change several business practices.

The most significant proposal would create a uniform database under the jurisdiction of the Supervisor of the Bureau of Loans. Licensees would be required to submit such data as the Supervisor, by rule, requires including the customer's name, social security number, address, driver's license number, amount of the transaction, and date of the transaction. A fee of $1.00 per transaction would be authorized. Further, the Supervisor would be specifically authorized to adopt rules to enforce the use of the database.

Another proposal would do away with the statutory term "roll over" and replace it with a concept restricting continuous transactions. A continuous transaction would be to extend or renew a deferred presentment transaction with the same account for another term clarifying that a transaction will not be continuous if there is at least one day from the time the previous transaction was paid in full with cash or guaranteed funds and a new transaction was executed for the same amount.

A third proposal would adopt "actual presentment" as the standard before a dishonored check charge could be assessed.

Another proposal would allow proceeds to be directed to the customer by means other than by cash.

Each of these proposals carries problems; and, we are concerned that the Department is apparently moving forward with these proposals without more careful consideration. The fact is that the existing law is working well, and complaints are minimal. The current law was carefully written, with industry and consumer input, to balance the needs of Alabama's consumers and payday lenders. The proposed changes threaten to upset a law that is serving well the needs of Alabama's consumers.

Too often there are unintended consequences that flow from changing existing law. A recent study by the Federal Reserve Bank of New York points out that bank bad check charges skyrocketed, and bankruptcies significantly increased, in those states where payday lending has been crippled or outlawed. So, when there is no compelling need to make changes, it seems ill-advised to do so.

We will keep you advised of developments.

Maurice L. Shevin, Association Director

Friends:

The Anniston Star reported on Tuesday, November 6, 2007, that the Anniston city council has enacted a six-month moratorium on granting business licenses to pawn shops, check-cashing businesses, title pawn shops and payday lenders. The moratorium does not impact already existing businesses. The newspaper reported that there are some 21 such businesses operating in Anniston now.

The move is seen as a response to a rather large influx of these lenders following settlement money into the area from lawsuits over PCB contamination.

Anthony Humphries, former Superintendent of Banks for Alabama, and now a local banker in Anniston, was quoted as saying that he understands the need for check cashing and title services, particularly for those who are not bank customers, although he thinks these businesses need to be strongly regulated. City Planner Toby Bennington said that the temporary ban is a good idea for any business the council is concerned about. The article quoted him as saying that this is an appropriate way of stepping back and looking to assure you have a balance of uses and complementary land-uses.

Maurice L. Shevin, Attorney at Law
Association Director

On August 27, 2007, the Department of Defense published its Final Rule covering loans to Service Members and their dependents, pursuant to the John Warner National Defense Authorization Act for Fiscal Year 2007. This long-awaited Final Rule is virtually identical to the Proposal published last April. The Rule becomes effective October 1, 2007.

The Rule is narrow, applying to three types of loan products:

non-purchase money vehicle title loans of less than 181 days,

refund anticipation loans, and

pay-day loans.

There has been no change in the definition of these terms from the Proposal to the Final DoD Rule.

If the creditor does not make these types of loans available to its customers, then this Final Rule has no impact on the creditor, regardless of the status of the borrower. If the creditor does make such Covered Loans, then it must be concerned with whether or not the borrower is a "Covered Borrower" within the meaning of that term under the Rule.

The Rule imposes substantial disclosure obligations and substantive restrictions on Covered Loans to Covered Borrowers. It is important that creditors carefully analyze their loan products, and implement appropriate practices by October 1, 2007. If the creditor offers what would be a Covered Loan if made to a Covered Borrower, the creditor must determine whether it intends to exclude Covered Borrowers from the universe of potential loan customers. If so, it must take steps to insure that no Covered Borrower receives a Covered Loan. If the creditor continues to offer Covered Loans to Covered Borrowers, then it must conform its loan practices to the substantive and disclosure requirements of the Final Rule. The Final Rule has preserved the Safe Harbor concept to protect those creditors making Covered Loans to those asserting that they are not Covered Borrowers.

Please let me know if you have any questions.

Maurice L. Shevin, Attorney at Law
Association Director

NOTE: A number of our members have asked for the definition of "Covered Borrower" and "Dependent" under the new DoD Rule. It is a little confusing because you have to look at both the regulation, at Title 10, Section 101(d)(6), and Title 38, Section 101(4) of the United States Code.

The following are Covered Borrowers:

A regular or reserve member of the Army, Navy, Marine Corps, Air Force, or Coast Guard, serving on active duty under a call or order that does not specify a period of 30 days or fewer; and

A member serving on Active Guard and Reserve duty--meaning, active duty or full-time National Guard duty performed by a member of a reserve component of the Army, Navy, Air Force, or Marine Corps, or full-time National Guard duty performed by a member of the National Guard, pursuant to an order to active duty or full-time National Guard duty for a period of 180 consecutive days or more for the purpose of organizing, administering, recruiting, instructing, or training the reserve components.

The following are Dependents of Covered Borrowers:

The Covered Member's spouse, child or an individual for whom the member provided more than one-half of the individual's support for 180 days immediately preceding an extension of consumer credit covered by the Rule.

"Child" is also a defined term at Title 38, Section 101(4), and is rather complex. In summary, a "child" is a natural or adopted person, under the age of 18, or before the age of 18 became permanently incapable of self-support, or in an academic program and under the age of 23.

TO: Members of Modern Financial Services Association of Alabama

FROM Maurice L. Shevin, Association Director

DATE: July 26, 2007

RE: Bank Discontinuance in Alabama

The prevalence of bank discontinuance in Alabama continues to be a problem. With the merger of Regions Bank and AmSouth Bank, too many of our members have had their accounts arbitrarily closed. Unfortunately, many banks assume that all deferred presentment licensees are Money Services Businesses, when most are not. There appears to be little interest by the State Banking Department in making certain that deferred presentment licensees have adequate banking relationships.

It has been our experience that the following banks are open for business with deferred presentment licensees, although one or more may make the cost of doing business too high:

Wachovia Bank

Peoples Bank of North Alabama

Citizens Bank of North Alabama

Red Mountain Bank

MidSouth Bank

Cadence Bank

We will attempt to update this list as the names of banks willing to entertain business with deferred presentment licensees, become known to us.

Alabama Small Loan Act licensees are also significantly affected by the law. The new definition of Military Annual Percentage Rate (“MAPR”) causes more elements in a transaction to be added to the federal APR; and, those Alabama Small Loan Act licensees who are making loans under the “Alternative Rate” will generally find that their rates of charge exceed the 36% MAPR.

It is interesting to note that even Mini-Code licensees and banks have the potential to be affected by the law, particularly as the DOD Regulations are written. For example, a standard six-month loan secured by a vehicle is a military loan under the DOD Regulations; and, as such, if made to a covered borrower, all of the requirements of the DOD Regulations, including the new written disclosures, the oral disclosures and the prohibition against mandatory, pre-dispute arbitration become effective.

The Regulations are out for comment for 60 days. The Talent Amendment is slated to become effective October 1, 2007.

Friends:

As you read this message, the Alabama Legislature is preparing to come into its Regular Session. We have already been told that bills are being drafted that will adversely affect the Deferred Presentment Industry. In addition, the Title Pawn Industry is facing the same. This is happening in an atmosphere of attacking all subprime lending as "predatory." If left unaddressed, there could be very serious repercussions for both Industries.

The Title Pawn Council of Alabama is spearheading an initiative to counter the bad publicity that has been circulating about Title Pawn Companies and Deferred Presentment Licensees. The initiative is known as Alabama Fair Lending (for the moment), and is being organized as an effort independent from the Title Pawn Council.

The idea is to create an umbrella organization representing both title pawn and deferred presentment, that will communicate the truth about both industries to the press, the public and to customers. A major theme of the PR program will be to make the public aware of the integrity of these industries by demonstrating fair lending practices. As you know, our Association, MFSA, has already adopted and published its Code of Ethics and Best Practices, which can be found on the Membership page of this website. This campaign initiative is designed to promote fair lending practices and defend our types of credit as the "smart choice" for temporary problems. It is also designed to show that those attacking the industries simply don't care whether our customers have access to credit when they need it.

This is a significant effort that is being undertaken with professional PR and marketing firms. It is not inexpensive. Nevertheless, if you will join in this effort, it may be the best money you will have ever spent.

If you are willing to join and help protect your business, I urge you to contact Max Wood at maxwood@mindspring.com for more details. Your Association's Board of Directors has endorsed this concept and encourages our members to participate. The national payday loan associations are running a similar campaign. Max has shared a News Update below that explains how the national CFSA's program is complimentary to the local initiative. Please consider joining in the effort.

Thanks.

CFSA LAUNCHES ADVERTISING & PR PROGRAM

A Very Well Done Program That Will Compliment Our Effort

February 21, 2007

By now you may have seen the TV commercials launched by the CFSA for payday lending (if not click here). They are just outstanding. As you know, we believe this has been needed for our industry for a very long time and we are happy to see such a well done program launched by CFSA.

You may ask, how does this fit with our newly announced program? In a few words, we believe it will fit like a "hand and glove!" Our message will be very similar, but directed to the people of Alabama through a grass-roots campaign. And, it will be for all short term cash loans (title and payday) -- not just payday loans. Additionally, you will not need to become a member of CFSA in order to directly benefit. You only need to join our new association (now in the works).

Stated another way, our new program will be available to all payday and title lenders who join with us (over 200 stores so far). Our program is not exclusively for the major payday chains which includes CFSA members like Advance America, Check Into Cash, Check N Go, etc. This is a grass-roots program for all operators in Alabama who want to be identified as "Fair Lenders." We believe our new program will dove-tail quite nicely with the highly successful (and impressive) CFSA launch. And, based on the latest Alabama payday bill to be offered, it is not a minute too soon (click here for information).

We fully expect our message to be similar to the CFSA campaign. Namely, a code of ethics, identification of your store through advertising as a "Fair Lending" store and consumer oriented messages designed to be sure our services are fully understood by customers, regulators and legislators here in Alabama. We believe this will give those who have joined with a very distinct advantage over those who are not "Fair Lenders." Our members will certainly be well identified as such with aggressive advertising, a web site and an 800 number for customers who wish to contact a "Fair Lender" store.

In sum, the CFSA program is a very good thing. We believe their program will have a very positive impact (see what others are saying at the links below). We also firmly believe the CFSA program will make our program much more effective than it would have been otherwise.

We will keep you posted on our progress.

February 2, 2007 - The Federal Reserve Bank of New York Releases a Report on Payday Lender Fees

The American Bankers newspaper reported on Wednesday, January 31, 2007, that a report released by the Federal Reserve Bank of New York found that fees charged by payday lenders are not excessive and should not be considered predatory. Rather, high fees may actually reflect that there are too few payday lending companies within a given area and that more competition would bring fees down.

Donald Morgan, a research officer for the New York Federal Reserve, argued that increased regulation of the industry could actually result in an increase in fee costs from the typical payday lending fee of $15 per $100 advanced. While payday lenders are characterized as preying on lower-income households, Morgan’s study found that those who live in states that allow unlimited payday loans are less likely to report being turned down for credit and less likely to suffer delinquencies.

The Alabama Trial Lawyers Association was delighted with Senator Mitchum's election. The Alabama Senate has a long history of initial leadership squabbles. However, traditionally, the 35 Alabama Senators bury the hatchet and come together to do the people's business in a fair and equitable manner.

As expected Representative Seth Hammett has retained the position of House Speaker for another term.