Another side effect of the stagnant economy has been the surplus of short-term methods devised to extract cash from a public desperate for financial relief. Among the more visible of these ventures are the ubiquitous cash advance outlets, payday loan facilities, and other such franchises that maybe found throughout the southland, especially in minority neighborhoods.
These businesses have been sanctioned by the California legislature since 1996, and have long passed the stage of being a “cottage industry,” because they are responsible for $247 million being collected annually from Black and Latino communities statewide.
These and other financial traps were discussed in a recent briefing at the downtown California Endowment this past May 12. Among the groups participating were the Alliance of Californians for Community Empowerment (ACCE), the Center for Responsible Lending, and the Los Angeles district attorney’s office, along with the host organization, New American Media (NAM).
Ginna Green of the Center for Responsible Lending summed up the pratfalls awaiting the cash strapped by saying “over the last five years we’ve seen a tremendous growth in payday lending, overdraft loans, and debt-settlement companies.”
At the forefront of the current economic crisis are the rash of foreclosures and the reactions of financial institutions that seem interested in exploiting the misfortune of those in dire financial straits, especially minorities.
Fontana resident Peggy Mears spoke from personal experience and shared how she and her husband’s home ownership difficulties led to her eventual involvement with the ACCE. Mears became angered with their loan provider, OneWest Bank, and its offers of unrealistic alternatives and “assistance” more likely to aggravate an already precarious situation than to bestow any meaningful relief.
Mears implicated major financial institutions including Bank of America, Chase, and Wells Fargo for their complicity in this financial meltdown (Bloomberg, the financial news and data service released an article on May 11, in which Wells Fargo employees stated categorically that they deliberately targeted African American applications, using the rationale that they weren’t knowledgeable enough to recognize risky credit and loan offers).
Mears urged those in similar straits to seek out nonprofits to assist pressured-mortgage holders, noting that “a lot of homeowners don’t know about the community organizations available to help them.”
Among the groups she mentioned are California Forward, Central Investment Center, and the Service Employees International Union (SEIU).
The briefing featured a list of “red flags,” or warning signs, that financial impropriety might be in place. They include: unsolicited offers for financial or foreclosure assistance, demands for up-front fees, guarantees of success in the form of financial relief, and attempts to transfer a property title to a third party.