UMCOR, PAYDAY LENDING AND MISSION U

This is another post designed for narrow margins, two columns, back-to-back, and divided vertically down the middle.
**********************************************************************************

UNITED METHODIST WOMEN

SOCIAL ACTION, NC DISTRICT

June 2016

 

We all know of the continued rains and the flooding in Texas. We need to continue funding and/or preparing UMCOR kits to help those who have lost so much—if not everything.

 

And mentioning UMCOR reminds me: General Conference renamed the traditional One Great Hour of Sharing. The day of special offering (traditionally the fourth Sunday of Lent, but can be observed as a church decides) will now be known as UMCOR Sunday. UMCOR has no source of revenue for administration except from One Great Hour of Sharing (now UMCOR Sunday). One hundred percent of gifts designated to UMCOR go to the cause stipulated. UMCOR receives no money from the apportionments paid to the general church by congregations. Other denominations will continue to use the name One Great Hour of Sharing.. 

****************

The UMW was able to make some very small changes in the Texas law regarding payday lending. But the Consumer Financial Protection Bureau (CFPB) has within the last several days released a proposal that will regulate payday lenders at a federal level for the first time. Many borrowers end up paying an effective annual interest rate over 300%. “Too many borrowers seeking a short-term cash fix are saddled with loans they cannot afford and sink into long-term debt,” said the Bureau’s director, Richard Cordray. “The harm done to consumers by these business models needs to be addressed.”

The long-awaited proposal includes provisions that would (1) require lenders to determine that borrowers can repay their debt by assessing their credit history and means. (2) It would restrict the number of short-term rollover loans borrowers can take in succession to prevent what’s known as a “debt spiral.” (3) It would also require borrowers to be notified when a lender plans to deduct funds from their bank account and rein in a lender’s ability to repeatedly attempt to deduct those funds.

The rule is an attempt to address what many regard as an exploitative industry that has arisen to provide credit to people unable to get traditional loans, but it

 

doesn’t do much to address the underlying issue. Payday lending is, after all, an ugly and costly symptom of a much larger and more systemic problem—the financial disenfranchisement of America’s poor. It’s estimated that 12 million Americans use payday-loan products, and most of them earn less than $30,000 per year.

The CFPB has tried to keep the need for small-dollar, shorter term loans in mind in the creation of their rule. “We recognize that consumers may need to borrow money to meet unexpected drops in income or unexpected expenses,” Cordray said in his statement. “We recognize too that some lenders serving this market are committed to making loans that consumers can in fact afford to repay.” To that end, the new rule encourages options for longer-term loans that would mirror credit unions’ payday alternatives, such as an interest rate capped at below 30 percent with application fees of only $20. Some advocates of the new federal curbs criticized the rules, saying the complexity and tight strings would discourage banks and others from entering the market.

Contact your US legislators and ask them to support this proposal.

****************

 

HAVE YOU REGISTERED FOR MISSION U? You may do so online at umwnorthtexas.org. Remember: it’s at Faith UMC in Denton, 6060 Teasley Lane, July 15-16.

****************

In the June issue of The Atlantic magazine. a huge commercial company sponsored an ad which contains this line referring to infants being cared for in a hospital’s neonatal intensive care unit: “our most fragile, precious patients.” If an entity whose very existence depends on ‘the bottom line’—read ‘dollars’—recognizes our children at this tenuous stage of their lives as our most precious patients, surely we and our elected officials can acknowledge that evaluation—and do everything in our power to give them a good start and provide reasonable and faithful support for their development.  

 

****************