The Honorable Scott M. Stringer Comptroller, New York One Centre Street Ny, NY 10007
Dear Comptroller Stringer:
The organizations that are undersigned you to definitely instantly 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 financing and high-cost installment financing organizations in 2016. Also, 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, payday loans ND owns several payday loan providers, including cash Mart and also the Check Cashing Store.
Spending general public retirement funds in disreputable payday financing businesses raises an immediate conflict for the City. Not merely do these businesses make triple-digit rate of interest loans being unlawful in ny, but the majority of these have already been the main topic of enforcement actions for flagrant violations regarding the legislation; mistreated clients; and encountered allegations of misleading and defrauding investors вЂ“ including pension that is public вЂ“ in states where they have been allowed to use.
Among the list of investments : в—Џ money America Overseas, Inc. and EZCORP, Inc. happen 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 houses 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 laws and regulations. в—Џ World Acceptance Corp. happens to be under research because of 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, as well as other federal customer economic legislation. в—Џ Enova Overseas, Inc., operator associated with the payday that is online CashNetUSA, had been discovered to own gotten probably the most consumer complaints among all payday lenders,vii in accordance with the CFPBвЂ™s customer problem database. в—Џ DFC Global, Inc. ended up being sued with general general general general general public retirement investment regarding the grounds so it вЂњmisrepresented to investors that  it complied with federal 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 have got an ethical and obligation that is fiduciary divest.
Nyc is amongst the 15 states, plus D.C., where state that is strong rules and enforcement efficiently ban payday lending. Brand brand brand brand New YorkвЂ™s usury laws and regulations are one of the strongest into the country, capping rates of interest at 25% APR. Because 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 work, individuals struggling to obtain from paycheck to paycheck are methodically targeted for high-cost loans they can’t pay for. Payday loan providers charge exorbitant costs and shockingly high interest rates 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. Analysis has shown that communities of color are disproportionately targeted of these debt-trap loans.x
Regardless of the clear advantages of banning payday loan providers along with other fringe financial services organizations have actually for a long time forced legislation in Albany that could legalize high-cost predatory lending in nyc. Those efforts are beaten because of advocacy that is tireless a statewide coalition of civil liberties, faith-based, work and community teams.
This present year, lawmakers once once again reaffirmed 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 brand New YorkвЂ™s check cashing industry and a California-based вЂњfintechвЂќ corporation вЂ“ that will have inflated brand brand brand brand brand New YorkвЂ™s usury rules and launched the floodgates to predatory financing.
Meanwhile, at the time of financial 12 months 2016, the five new york retirement funds committed to at minimum six regarding the countryвЂ™s largest payday and high-cost installment lenders вЂ“ money America Overseas, Inc., Enova Global, Inc., EZCORP, Inc., First Cash Financial solutions, Inc., Regional Management Corp., and World Acceptance Corp. вЂ“ and had been spent greatly in Lone celebrity Fund VIII, an exclusive 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 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 straight straight straight straight down on unlawful payday lending, issuing warnings to loan companies it was unlawful to gather on pay day loans in Nyc; directing payday lenders to end making unlawful pay day loans to Nyc State residents; and contacting banking institutions and their re re re re re payments processors to cease permitting payday loan providers to get into New YorkersвЂ™ bank records. Nyc has additionally acquired contract through the nationwide credit reporting agencies to stop reporting unlawful pay day loans on New YorkersвЂ™ credit file.
Ny has made essential strides toward financial equality and possibility recently. Just last year, as an example, the worker-led вЂњFight for $15вЂќ motion won a landmark enhance to your stateвЂ™s wage that is minimum. And though we now have far 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.
Just last year, nj-new jersey, that also efficiently bans lending that is payday offered its pension investment assets in an exclusive equity fund that held Ace Cash Express, another regarding the nationвЂ™s biggest payday lenders.xii Commenting in the stateвЂ™s divestment using this lending that is payday, the president associated with nj-new jersey State Investment Council reported, вЂњThe bright line is whatвЂ™s legal to complete and whatвЂ™s maybe perhaps perhaps maybe perhaps maybe maybe not appropriate to complete within the state of New Jersey.вЂќxiii At the very least, this new York City retirement funds should follow this exact same bright line and completely and forever divest from payday financing organizations.
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 good 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 letter that is similar NYS Comptroller Thomas P. DiNapoli regarding nyc State retirement funds.