Federal payday loan rule: why it is important, and how can you help

6793826885_d3b6befb99_zConnecticut does not have payday loans. This is actually a very good thing, as the experience in other states shows: payday loans more often than not put borrowers in debt spirals that are really hard to break free from. Connecticut consumers save $133 million, every year, on fees thanks to this.

Right now, the Consumer Financial Protection Bureau (CFPB) is considering a new rule that will greatly limit payday lending at the federal level. This is important for two reasons. First, it will ensure that Connecticut will no longer face out-of-state lenders trying to litigate their way in. Second, this might help prevent working families to pay outrageous interest rates in short term loans. Just some examples: the typical APR for a two week loan in Texas is 662%; in Ohio, 677%; California, 460%.

So what can we do?

The CFPB has opened a comment period for their proposed rule – and we need you to speak up against payday lending.  Use this website to submit a comment to the CFPB against payday lending.
It is easy – it will take you less than five minutes. Here is some suggested language:
I am writing to ask you to strengthen your proposed national payday loan rule to rein in abusive high-cost loans. Your proposed payday rule sanctions dangerous levels of triple-digit interest rate loans. Our state does not even legalize these triple-digit interest rate loans and we worry that payday lenders will use your rule to seek a green light to come into our state. We ask that you strengthen the rule to close any loopholes and provide states like ours with additional tools to keep unfair and abusive payday loans out of our state. Families in our state are much better off without these unaffordable, debt trap loans.
These comments make a difference. The CFPB knows that Connecticut does not have payday lending. Reminding them how this helps families in the state is important. Make sure to make your voice heard!

Is there anything else we can do?

Yes! Has your organization spoken up against payday loans? It should! 

The CFPB greatly values comments from advocates and direct service organizations. E-mail us as soon as possible for more details on how, or if you need information, templates or you have any questions.

Recession May Be Past, But Underemployment and Income Inequality Still Define Landscape in Connecticut

State Ranks 23rd Overall in Financial Security of Residents; Households of Color Face Huge Uphill Climb

Even though the national unemployment rate has dropped to five percent in recent months, the unemployment and underemployment rates in Connecticut remain stubbornly high, according to a new report from the Corporation for Enterprise Development (CFED).
Indeed, 39% of Connecticut’s households are locked into a “new normal” of perpetual financial insecurity, unable to build the savings needed to last even three months in the event of an emergency. The research, reflected in CFED’s 2016 Assets & Opportunity Scorecard, also found that state policies are doing little to improve the financial security of Connecticut residents.
The situation is most dire for households of color. African-American and Latino households in Connecticut are significantly more likely to live below the federal poverty line compared to white households. Even more startling, new data show that businesses owned by whites in Connecticut are valued almost 15 times higher than businesses owned by African-American residents.
Published annually, the Assets & Opportunity Scorecard offers the most comprehensive look available at Americans’ ability to save and build wealth, stay out of poverty and create a more prosperous future. This year’s Scorecard assesses all 50 states and the District of Columbia on 61 outcome measures spanning five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education. It also ranks the states on 69 policies that promote financial security. When it comes to outcomes, Vermont ranks at the top of the country overall, while Mississippi ranks last.
Connecticut’s 23rd -place outcome ranking improved slightly from last year’s 27th -place ranking. The state received a “B” in Financial Assets & Income, driven by a low income poverty rate, a high rate of households with savings accounts and a low rate of underbanked households-those which have bank accounts but still use high-cost non-bank alternatives such as payday loans. Unfortunately, the state is one of the worst when it comes to income inequality-the richest 20% of households in Connecticut make 5.1 times as much annually as the poorest 20%. The state received an “F” in Housing & Homeownership due to its high foreclosure rate (3.06%) and its disparities in homeownership by race and income. The homeownership rate for white households in Connecticut is twice that of households of color, and the homeownership rate among households in the top income quintile is 2.8 times higher than for that homeownership rate for households in the bottom income quintile. The state received an “A” in Health Care, due in part to having one of the lowest uninsured rates in the country (8.0%). Connecticut earned an “A” in Education, driven by its second-best rate of early childhood education enrollment (64.6%). Finally, CFED Connecticut earned a “D” in Businesses & Jobs, meaning residents don’t have access to quality job and business opportunities.
 The Scorecard also evaluates 69 different policy measures to determine how well states are addressing the challenges facing their residents. Connecticut ranks third overall in policy adoption, having adopted 36 of the 69 policies assessed. It is the third-best state when it comes to Education policies, partly because of its adequate funding for K-12 and postsecondary education. Connecticut ranks 5th in Financial Assets & Income, thanks to its refundable Earned Income Tax Credit, consumer protections for small-dollar lending and legislation that allows financial institutions to operate prize-linked savings accounts. The state ranks slightly lower, but still in the top ten, for Housing & Homeownership policies (7th) and Health Care policies (7th). Connecticut ranks 6th in the area of Businesses & Jobs, having implemented half of assessed policies in this area (5 of 10).
Across the nation, the Scorecard found scant evidence that federal and state governments were willing to embrace policies that would open new doors to greater financial security for those struggling the most in the American economy. Without such commitments, most low-income individuals-particularly people of color-find themselves falling farther behind.
Among the key findings from this year’s Scorecard:
  • Homeownership rates remain at historic lows, falling to 63.1% for the eighth consecutive year of decline and contributing to crowding and rising costs in the rental market.
  • Fully 14.3% of adults say there was a time in the past year that they needed to see a doctor but could not because of cost. The statistics are worse for individuals of color with one in four Latino adults and one in five African-American adults saying money concerns prevented them from seeing a doctor.
  • Although both high school graduation rates (82.3%) and four-year college degree attainment (30.1%) increased from 2013 to 2014, racial disparities remain severe. Less than 20% of AfricanAmerican adults and fewer than 15% of Latino adults hold four-year degrees.
  •  While the national unemployment rate has dropped to 5%, the underemployment rate is twice as high, at 10.8%. What’s more, one-in-four jobs is in a low-wage occupation.
  • Building up even a small amount of savings is a challenge for almost half the country. Some 44% of households are “liquid asset poor,” meaning they have less than three months of savings to live at the poverty level if they suffer an income loss.
  • Business ownership among both men and women (21.4% and 17.1% of the labor force, respectively) declined from 2007 to 2012, even as average business value for both groups increased. Yet female-owned businesses still are worth only a third the value of the average male-owned business-$239,486 to $726,141, respectively.
 “There certainly are positive signs that the nation’s economy is improving,” noted Andrea Levere, President of CFED. “But there also is very compelling evidence that many households are stuck in a financial hole and are struggling to dig themselves out. State governments can play a critical role in helping them move on to firmer ground and a more prosperous future.”
To read an analysis of key findings from the 2016 Assets & Opportunity Scorecard, click here. To access the complete Scorecard, visit http://scorecard.cfed.org.

Behavioral Economics and Asset Building: Some ideas

The Connecticut Asset Building Collaborative´s Peer Learning Network second workshop hosted its second workshop last Thursday. We had a very good, lively debate, with many good comments, suggestions and ideas. Julia Brown gave a truly excellent presentation that really opened up the discussion, with plenty of things to talk about and revisit.

As promised, here you have a link to her presentation, as well as many of the studies and projects that were referenced during the workshop:

We are also looking into posting the video later this week, if possible. In any case, this should be a good start. For the next session, we are looking for ideas of possible subject to cover. If you have any ideas for the the spring workshop, please e-mail us!
You can find the Powerpoint slides after the jump:

Continue reading