Connecticut 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?
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.
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
- 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.
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:
- Here is a link to her Powerpoint presentation.
- A brief on general principles on behavioral economics.
- Here is more information on the Household Finance Initiative.
- You can find more about Julia´s work and research on the Innovations for Poverty Action website.
- Two books that were referenced during the discussion: "Hand to Mouth. Living in Bootstrap America" by Linda Tirado and "Scarcity: Why Having Too Little Means So Much" by Sendhil Mullainathan and Eldae Shafir.
- The Family Independence Initiative, a non-profit that was referenced in the discussion that uses peer groups to promote financial empowerment.
- Two articles on check cashing stores: "The High Cost, for the Poor, of Using a Bank" (New Yorker) and "The Real Reason the Poor Go Without Bank Accounts" (CityLab)