While it is easier for the house owners to avail loans as they can place their property as collateral, it is very difficult for the tenants to get a loan, no matter how much urgent it is for them. But this does not in any case mean that they have to face the problem of having no money. They can always go for the tenant loans available with the internet based money lenders.
If you think that the rates on the tenant loans will be too high, it is better to pay a visit to your local pawn broker. Check if he is willing to provide you with the unsecured loan and if yes, at what rate. You will be shocked. If you need low cost tenant loans, you can apply with the new age online money lenders. They offer you Cash loans as well as other loans at much lower rates than these local bankers and pawn brokers. First of all, these people will not agree to unsecured loans unless your credit record is very strong. But this is not the case with the online money lenders.
Tenant loans are easy to apply. You can either apply for the loans online or by visiting the branch personally. These loans are available for all types of tenants and even if you have a poor credit history in the past then also there is no hindrance for applying these kinds of loans. These loans are available at a very low rate of interest. But the rate of interest varies upon your present financial situation. The main advantage of the loans is the period of repayment of the loans is spread from 1-10 years of time. This means that you get enough time to repay the loans.
These loans usually are of unsecured types. Unsecured loans do not require collaterals. But you do need to provide your source of and net monthly income. Based on this income, the money lenders determine how much amount can be sanctioned as a loan to you. Once you agree to the amount, the rest of formalities are completed in few hours. Very often the money gets transferred to your account in a matter of two or three hours. Through these loans, you can obtain amount in the range of £1000-£25000
About UK Financials
• Since 1999 UK Financials LTD, is financial solutions provider & UK Financial Advisers, has provided tenant loans, secured loans, mortgage guides, loan guides, re-mortgage, car loans uk, debt consolidation loans, iva & secured homeowner loans.
• UK Financials LTD introduces people who want to lend with those who want to borrow and at very attractive rates with no charges for early payment etc.
• UK Financials LTD earned its reputation as the premier global provider of loan market information and analysis through its in-depth focus on the loan industry
Page Source :http://www.enewswire.co.uk
Tuesday, September 1, 2009
Tuesday, August 11, 2009
Cash Advance: A Discipline Tool
When you avail yourself of a cash advance, you are, more often than not, short on cash. Further, it could mean that you were not prudent and careful in spending within your "affordability" limits. Still, it could also mean that you did not have the proper control of what you have.
On another light, getting a cash advance could also mean that you are practicing discipline, and you are using such a financial option in teaching yourself to have more control. Let's explore this possibility.
When you avail of a payday loan, a form of cash advance, you are spending money that has not yet reached your pockets. It is like "counting your chicks even before the eggs were hatched." While this is true, availing of a payday loans - Canada or elsewhere -is also making your more futuristic. Why?
First, since you have already practically spent your money (on your next payday), you are left with less than your usual monthly cash. As such, you should already think in advance as to what your other options would be, so that you will still be able to live within your means.
You may look for part-time jobs that you can take, for the meantime that you are still short of cash. Or, you could dramatically cut down on your expenses. Just make sure that you don't settle for another cash advance, as that would make your situation worse. Whatever option you've decided to take, you are, for the most part, thinking way ahead. And that's a good thing!
Second, getting a cash advance teaches you to be more disciplined. If you are used to having Starbucks for breakfast, then you may want to cut down on this habit if you've already spent a certain portion of your next payday. You could always go for other cheaper alternatives to Starbucks.
For one, you can go for cheaper coffee. But if you really are a Starbucks fan, then you can just buy some coffee beans from the said shop and make your coffee at home. You'd still have Starbucks - but at a lesser price. Who knows, you would make this into a habit. In the long run - especially after the cash advance has already been paid off - you could truly save a few dollars just by making your Starbucks coffee at home!
Third, the cash advance experience could teach you to save. Because you've experienced how it is to be short on cash, to be without money when you truly need some, then you could rethink your spending behavior and make way for some savings. Naturally, you feel uncomfortable spending money that's not yet within your hands. Because you don't want to be in the same situation again, you try to save as much as you can. Thus, when rainy days come, you always have something in your account to spend
Source:
http://www.bestsyndication.com/
On another light, getting a cash advance could also mean that you are practicing discipline, and you are using such a financial option in teaching yourself to have more control. Let's explore this possibility.
When you avail of a payday loan, a form of cash advance, you are spending money that has not yet reached your pockets. It is like "counting your chicks even before the eggs were hatched." While this is true, availing of a payday loans - Canada or elsewhere -is also making your more futuristic. Why?
First, since you have already practically spent your money (on your next payday), you are left with less than your usual monthly cash. As such, you should already think in advance as to what your other options would be, so that you will still be able to live within your means.
You may look for part-time jobs that you can take, for the meantime that you are still short of cash. Or, you could dramatically cut down on your expenses. Just make sure that you don't settle for another cash advance, as that would make your situation worse. Whatever option you've decided to take, you are, for the most part, thinking way ahead. And that's a good thing!
Second, getting a cash advance teaches you to be more disciplined. If you are used to having Starbucks for breakfast, then you may want to cut down on this habit if you've already spent a certain portion of your next payday. You could always go for other cheaper alternatives to Starbucks.
For one, you can go for cheaper coffee. But if you really are a Starbucks fan, then you can just buy some coffee beans from the said shop and make your coffee at home. You'd still have Starbucks - but at a lesser price. Who knows, you would make this into a habit. In the long run - especially after the cash advance has already been paid off - you could truly save a few dollars just by making your Starbucks coffee at home!
Third, the cash advance experience could teach you to save. Because you've experienced how it is to be short on cash, to be without money when you truly need some, then you could rethink your spending behavior and make way for some savings. Naturally, you feel uncomfortable spending money that's not yet within your hands. Because you don't want to be in the same situation again, you try to save as much as you can. Thus, when rainy days come, you always have something in your account to spend
Source:
http://www.bestsyndication.com/
Wednesday, April 15, 2009
Analyst: GM bankruptcy risk increases
Washington -- The odds of General Motors Corp.'s filing for bankruptcy protection have increased, JPMorgan Chase said in a research report Monday.
One big factor is the government's $13.4 billion in loans to GM, which also may have to be restructured -- along with $28 billion held by GM's bondholders and $20 billion in obligations to the United Auto Workers.
"If the government has now truly realized that it will eventually have to 'restructure' its own loans to GM (similar to Citi or AIG), a bankruptcy may be much more politically necessary (i.e. judge-imposed changes to the government's claims would be politically less painful)," wrote Himanshu Patel, an auto analyst for JPMorgan.
GM has been planning for weeks for a possible bankruptcy filing if it can't meet a June 1 deadline to win tough concessions from its bondholders and the United Auto Workers union demanded by the Obama administration's auto task force.
GM's president and CEO Fritz Henderson said last week that the company is preparing for a bankruptcy filing if necessary but said the company's preference is to win needed concessions outside of bankruptcy court. Earlier this month, Henderson said bankruptcy is now "more probable."
"If it can't be done outside of a bankruptcy process, it will be done within it," Henderson said.
GM's stock was off sharply in early trading Monday.
One big issue is how much GM's creditors and bondholders could delay the company's exit from a quick bankruptcy under Section 363 of the bankruptcy code. That allows for an asset sale that would let the government split the healthy parts off from the rest of the company.
One scenario under consideration would be to split the Detroit automaker into a "good" and "bad" company -- allowing the good part of the automaker -- assets like Chevrolet, Buick and Cadillac -- to emerge within a month, while the rest of the company could remain in bankruptcy for an extended period.
GM plans to unveil a harsher offer to its bondholders this week than the one it proposed last month. This new offer could be as little as 20 percent of GM's equity, versus an offer last month of 8 cents on the dollar, 16 cents of new debt and up to 90 percent of GM's equity.
"This development makes us think that a bankruptcy is more likely," Patel wrote of the new harsher offer.
Patel said he is expecting a harsher offer to the UAW as well. GM had reportedly proposed last month to the UAW it accept $10 billion in preferred stock with a 9 percent interest rate and $10 billion in cash over 20 years.
Ford Motor Co. -- which hasn't accepted government loans -- recently won a deal to restructure its UAW health care trust fund with $6 billion in cash and the remaining $7 billion in Ford stock or cash. But Ford has said if GM or Chrysler get further concessions from the UAW, the Dearborn automaker expects it would receive the same deal.
Source:http://www.detnews.com/article
One big factor is the government's $13.4 billion in loans to GM, which also may have to be restructured -- along with $28 billion held by GM's bondholders and $20 billion in obligations to the United Auto Workers.
"If the government has now truly realized that it will eventually have to 'restructure' its own loans to GM (similar to Citi or AIG), a bankruptcy may be much more politically necessary (i.e. judge-imposed changes to the government's claims would be politically less painful)," wrote Himanshu Patel, an auto analyst for JPMorgan.
GM has been planning for weeks for a possible bankruptcy filing if it can't meet a June 1 deadline to win tough concessions from its bondholders and the United Auto Workers union demanded by the Obama administration's auto task force.
GM's president and CEO Fritz Henderson said last week that the company is preparing for a bankruptcy filing if necessary but said the company's preference is to win needed concessions outside of bankruptcy court. Earlier this month, Henderson said bankruptcy is now "more probable."
"If it can't be done outside of a bankruptcy process, it will be done within it," Henderson said.
GM's stock was off sharply in early trading Monday.
One big issue is how much GM's creditors and bondholders could delay the company's exit from a quick bankruptcy under Section 363 of the bankruptcy code. That allows for an asset sale that would let the government split the healthy parts off from the rest of the company.
One scenario under consideration would be to split the Detroit automaker into a "good" and "bad" company -- allowing the good part of the automaker -- assets like Chevrolet, Buick and Cadillac -- to emerge within a month, while the rest of the company could remain in bankruptcy for an extended period.
GM plans to unveil a harsher offer to its bondholders this week than the one it proposed last month. This new offer could be as little as 20 percent of GM's equity, versus an offer last month of 8 cents on the dollar, 16 cents of new debt and up to 90 percent of GM's equity.
"This development makes us think that a bankruptcy is more likely," Patel wrote of the new harsher offer.
Patel said he is expecting a harsher offer to the UAW as well. GM had reportedly proposed last month to the UAW it accept $10 billion in preferred stock with a 9 percent interest rate and $10 billion in cash over 20 years.
Ford Motor Co. -- which hasn't accepted government loans -- recently won a deal to restructure its UAW health care trust fund with $6 billion in cash and the remaining $7 billion in Ford stock or cash. But Ford has said if GM or Chrysler get further concessions from the UAW, the Dearborn automaker expects it would receive the same deal.
Source:http://www.detnews.com/article
LIN TV, Belo May Breach Loan Pacts as Cash Declines
April 14 (Bloomberg) -- LIN TV Corp. and Belo Corp., their cash flows declining as ad sales drop, risk breaching loan agreements this year and face higher bank fees and interest to renegotiate the deals.
Broadcasters may violate loan covenants if earnings-to-debt ratios fall below minimum levels set in credit agreements, said Neil Begley, a bond analyst with Moody’s Investors Service. To amend the loans, the broadcasters may be required to pay fees and higher interest, using up more cash, he said.
“They’re going to have to duke it out with the banks,” Begley said in an interview. If earnings for TV broadcasters “keep getting worse, you’ll probably see a lot of restructurings,” he said.
Revenue at independent or non-network-owned chains such as LIN and Belo has plummeted as the global recession chokes consumer spending. Automotive advertising was off as much as 40 percent in the fourth quarter, broadcasters reported. Auto commercials made up as much as a fourth of ad sales for TV companies, said Barry Lucas, an analyst with Gabelli & Co. in Rye, New York.
“Until domestic auto revenue starts improving, it’s hard for these companies to do a lot better,” Lucas said in an interview.
Belo and LIN own or operate 47 TV stations. Belo says its stations reach 14 percent of U.S. households with televisions. LIN says its broadcasts reach 9 percent. Providence, Rhode Island-based LIN’s biggest markets are Dallas-Fort Worth, Indianapolis and San Diego. Dallas-based Belo’s major markets are Dallas-Fort Worth, Houston and Phoenix.
‘Remain Compliant’
LIN “expects to remain compliant” with its covenants, while “preparing to seek an amendment if we deem it necessary,” Chief Financial Officer Richard Schmaeling said in an interview. Belo renegotiated terms in February, with a goal of not having to seek further relief. “We hope that’s the case,” Belo spokesman Paul Fry said in an interview.
Belo’s debt totaled $1.09 billion at the end of 2008, while LIN’s amounted to $743.4 million, according to regulatory filings. Bank loans are a portion of the debt. The totals are used to calculate leverage ratios. The ratio is the company’s debt divided by its earnings before interest, taxes, amortization and depreciation, or Ebitda. The allowable ratio is set in negotiations between the companies and their lenders.
Companies that violate covenants and fail to secure waivers on the bank loans may face default. New York-based Young Broadcasting Inc., owner of 10 stations, filed for bankruptcy protection in February after missing interest payments.
Distressed Debt Exchanges
Broadcasters may turn to what Begley called “distressed debt exchanges” to stay within the leverage ratios of their loan agreements.
One debt exchange is known as PIK, or payment-in-kind, which provides investors with bonds or preferred stock, not cash. Nexstar Broadcasting Group Inc., the Irving, Texas-based owner of 32 stations, exchanged as much as $143.6 million of 7 percent notes for $142.3 million in PIKs, according to a March 30 statement.
“PIKs are a way for companies to save cash during a downturn,” said Shelly Lombard, a high-yield bond analyst with New York-based Gimme Credit.
Nexstar’s debt exchange provided “immediate covenant relief,” Moody’s said in a report April 2. The company still needs to secure an amendment to its loan agreements or risk a breach, according to Moody’s, citing the decline in ad spending. Nexstar had no comment, according to Joe Jaffoni, an outside spokesman for Nexstar at Jaffoni & Collins Inc.
‘Relief’ at Gray
Gray Television Inc., the Atlanta-based operator of 36 stations, won “relief” from pressure on its debt covenant this year when it amended its credit facility at the end of March, Moody’s said in a report April 1.
Gray, which has suspended cash dividends, was required to pay higher fees and accepted restrictions on borrowing and capital spending in exchange for an increase in the leverage ratio from its banks, according to a March 31 regulatory filing.
LIN has “an increased likelihood of bumping against its covenants” in the second half of 2009, said Jonathan Levine, a Stamford, Connecticut-based analyst with Jefferies & Co. “They would probably go to their banks to get a waiver and amendment to give them some flexibility.”
The banks might require an increase of two to four percentage points in the interest rate on LIN’s debt if they grant a waiver, Levine estimated in a report.
LIN’s Ebitda fell 11 percent in the fourth quarter to $32.9 million. Cash and short-term investments tumbled by half to $20.1 million from a year earlier.
‘Terms Aren’t Cheap’
“We have been consulting with our financial advisers,” LIN CFO Schmaeling said in an interview. “When you look at the amendments that are getting done in the marketplace now in our space, those revised terms aren’t cheap.”
At the end of 2008, the company had $135 million outstanding on its revolving credit facility and $78 million outstanding on its term loan, Schmaeling said.
“If things don’t improve, we have further cost-reduction actions we can put in place,” Schmaeling said. He declined to give details.
‘More Prolonged’ Downturn
Moody’s cited the possibility of a Belo default when it lowered ratings on $642 million in debt on March 4. A “more prolonged advertising downturn than anticipated” may prevent Belo from meeting covenants by the end of 2009, Moody’s said.
Belo’s Ebitda dropped 13 percent in the fourth quarter to $73.1 million. Cash and short-term investments fell 48 percent.
“In our current round of negotiations with the banks, we tried to get terms that will prevent us from going back to them,” Belo spokesman Fry said.
Belo won an increase in its maximum leverage ratio to 6.25- to-1 from 5.75-to-1 in February, according to a regulatory filing. The window narrows to 6-to-1 in July 2010, 5.75-to-1 on Sept. 30 and 5-to-1 on Dec. 31, Belo said in the March 2 filing. The company reported $437 million in a revolving credit facility at the end of 2008, according to the filing.
Ad sales may rebound next year from the 2010 Winter Olympics and political spending for U.S. congressional, state and local elections, said James Goss, an analyst with Barrington Research in Chicago.
“The question is, can they make it through 2009 so they can get the bump in earnings from political advertising revenue in 2010?” said Jefferies & Co.’s Levine.
Belo, whose shares plunged 91 percent in the past 12 months, climbed 9 cents, or 11 percent, to 90 cents at 4 p.m. in New York Stock Exchange composite trading. LIN declined 14 cents, or 8.6 percent, to $1.49. LIN shares lost 85 percent in the past year.
source:http://www.bloomberg.com/apps/news
Broadcasters may violate loan covenants if earnings-to-debt ratios fall below minimum levels set in credit agreements, said Neil Begley, a bond analyst with Moody’s Investors Service. To amend the loans, the broadcasters may be required to pay fees and higher interest, using up more cash, he said.
“They’re going to have to duke it out with the banks,” Begley said in an interview. If earnings for TV broadcasters “keep getting worse, you’ll probably see a lot of restructurings,” he said.
Revenue at independent or non-network-owned chains such as LIN and Belo has plummeted as the global recession chokes consumer spending. Automotive advertising was off as much as 40 percent in the fourth quarter, broadcasters reported. Auto commercials made up as much as a fourth of ad sales for TV companies, said Barry Lucas, an analyst with Gabelli & Co. in Rye, New York.
“Until domestic auto revenue starts improving, it’s hard for these companies to do a lot better,” Lucas said in an interview.
Belo and LIN own or operate 47 TV stations. Belo says its stations reach 14 percent of U.S. households with televisions. LIN says its broadcasts reach 9 percent. Providence, Rhode Island-based LIN’s biggest markets are Dallas-Fort Worth, Indianapolis and San Diego. Dallas-based Belo’s major markets are Dallas-Fort Worth, Houston and Phoenix.
‘Remain Compliant’
LIN “expects to remain compliant” with its covenants, while “preparing to seek an amendment if we deem it necessary,” Chief Financial Officer Richard Schmaeling said in an interview. Belo renegotiated terms in February, with a goal of not having to seek further relief. “We hope that’s the case,” Belo spokesman Paul Fry said in an interview.
Belo’s debt totaled $1.09 billion at the end of 2008, while LIN’s amounted to $743.4 million, according to regulatory filings. Bank loans are a portion of the debt. The totals are used to calculate leverage ratios. The ratio is the company’s debt divided by its earnings before interest, taxes, amortization and depreciation, or Ebitda. The allowable ratio is set in negotiations between the companies and their lenders.
Companies that violate covenants and fail to secure waivers on the bank loans may face default. New York-based Young Broadcasting Inc., owner of 10 stations, filed for bankruptcy protection in February after missing interest payments.
Distressed Debt Exchanges
Broadcasters may turn to what Begley called “distressed debt exchanges” to stay within the leverage ratios of their loan agreements.
One debt exchange is known as PIK, or payment-in-kind, which provides investors with bonds or preferred stock, not cash. Nexstar Broadcasting Group Inc., the Irving, Texas-based owner of 32 stations, exchanged as much as $143.6 million of 7 percent notes for $142.3 million in PIKs, according to a March 30 statement.
“PIKs are a way for companies to save cash during a downturn,” said Shelly Lombard, a high-yield bond analyst with New York-based Gimme Credit.
Nexstar’s debt exchange provided “immediate covenant relief,” Moody’s said in a report April 2. The company still needs to secure an amendment to its loan agreements or risk a breach, according to Moody’s, citing the decline in ad spending. Nexstar had no comment, according to Joe Jaffoni, an outside spokesman for Nexstar at Jaffoni & Collins Inc.
‘Relief’ at Gray
Gray Television Inc., the Atlanta-based operator of 36 stations, won “relief” from pressure on its debt covenant this year when it amended its credit facility at the end of March, Moody’s said in a report April 1.
Gray, which has suspended cash dividends, was required to pay higher fees and accepted restrictions on borrowing and capital spending in exchange for an increase in the leverage ratio from its banks, according to a March 31 regulatory filing.
LIN has “an increased likelihood of bumping against its covenants” in the second half of 2009, said Jonathan Levine, a Stamford, Connecticut-based analyst with Jefferies & Co. “They would probably go to their banks to get a waiver and amendment to give them some flexibility.”
The banks might require an increase of two to four percentage points in the interest rate on LIN’s debt if they grant a waiver, Levine estimated in a report.
LIN’s Ebitda fell 11 percent in the fourth quarter to $32.9 million. Cash and short-term investments tumbled by half to $20.1 million from a year earlier.
‘Terms Aren’t Cheap’
“We have been consulting with our financial advisers,” LIN CFO Schmaeling said in an interview. “When you look at the amendments that are getting done in the marketplace now in our space, those revised terms aren’t cheap.”
At the end of 2008, the company had $135 million outstanding on its revolving credit facility and $78 million outstanding on its term loan, Schmaeling said.
“If things don’t improve, we have further cost-reduction actions we can put in place,” Schmaeling said. He declined to give details.
‘More Prolonged’ Downturn
Moody’s cited the possibility of a Belo default when it lowered ratings on $642 million in debt on March 4. A “more prolonged advertising downturn than anticipated” may prevent Belo from meeting covenants by the end of 2009, Moody’s said.
Belo’s Ebitda dropped 13 percent in the fourth quarter to $73.1 million. Cash and short-term investments fell 48 percent.
“In our current round of negotiations with the banks, we tried to get terms that will prevent us from going back to them,” Belo spokesman Fry said.
Belo won an increase in its maximum leverage ratio to 6.25- to-1 from 5.75-to-1 in February, according to a regulatory filing. The window narrows to 6-to-1 in July 2010, 5.75-to-1 on Sept. 30 and 5-to-1 on Dec. 31, Belo said in the March 2 filing. The company reported $437 million in a revolving credit facility at the end of 2008, according to the filing.
Ad sales may rebound next year from the 2010 Winter Olympics and political spending for U.S. congressional, state and local elections, said James Goss, an analyst with Barrington Research in Chicago.
“The question is, can they make it through 2009 so they can get the bump in earnings from political advertising revenue in 2010?” said Jefferies & Co.’s Levine.
Belo, whose shares plunged 91 percent in the past 12 months, climbed 9 cents, or 11 percent, to 90 cents at 4 p.m. in New York Stock Exchange composite trading. LIN declined 14 cents, or 8.6 percent, to $1.49. LIN shares lost 85 percent in the past year.
source:http://www.bloomberg.com/apps/news
Wednesday, April 1, 2009
Predatory payday lenders target Black and Latino communities
Original source: southernstudies.org
As the misdeeds of major financial institutions continue to make the headlines, it should be no surprise to find out the many ways people have been cheated by financial institutions at the community level. The controversial practice known as "payday lending" is one of the most egregious examples. The process gives cash-strapped consumers an advance -- with exorbitant interest rates -- on their paychecks. For years consumer advocates have pushed for more regulations on the payday loan industry, arguing that these firms are in fact predatory lenders that trap the working poor in a cycle of debt.
Now a new study released today by the North Carolina-based research nonprofit Center for Responsible Lending found that race and ethnicity is the leading factor in determining payday lender locations. In essence that means minority communities are the largest targets of these predatory lending operations.
Payday loan stores are nearly eight times more concentrated in California's African-American and Latino neighborhoods as compared to white neighborhoods, draining these communities of some $250 million in payday loan fees annually, according to the new CRL study. Even after accounting for factors like income, education and poverty rates, CRL still found that these lenders are 2.4 times more concentrated in African-American and Latino neighborhoods.
Putting a cap on the industry
The payday lending firms claim they are providing a needed, short-term service to the working poor. But studies have shown that every year payday lenders strip $4.2 billion in excessive fees from Americans who think they're getting a two-week loan and end up trapped in debt. Borrowers end up paying more in interest - at annual rates of 400 percent (about 20 times the highest credit card rates) - which is much more than the amount of the loan they originally borrowed.
The good news is that state legislatures across the country are taking steps to regulate payday loans; hundreds of bills pertaining to such lenders have been introduced in more than 30 states in the past two years. In all, fifteen states and the District of Columbia have either capped rates leading to payday lenders shutting their doors or banned them outright.
In fact the South has led the charge in cracking down on the $28-billion industry. Georgia and North Carolina have already banned the practice. States like Virginia have passed reforms that help borrowers. This week Kentucky Governor Steve Beshear signed into law a ten-year moratorium on new payday lenders in the state. State legislatures in Texas have filed legislation that would mean greater transparency in the lending industry, cap interest rates at 36 percent, and close loopholes in state law that allow lenders to bypass tighter regulation. An intense battle is currently taking place in the South Carolina over reform legislation.
One long-term solution, consumer advocates like CRL argue, is for stronger federal legislation that would put a 36 percent cap on interest rates, which is the same cap that Congress already has in place for military families. A bill with a 36 percent cap has been introduced in the U.S. Senate (S500) and House (H.R. 1608), and would not prohibit states from instituting their own caps.
Source:http://www.pww.org/article/articleview/15042/
As the misdeeds of major financial institutions continue to make the headlines, it should be no surprise to find out the many ways people have been cheated by financial institutions at the community level. The controversial practice known as "payday lending" is one of the most egregious examples. The process gives cash-strapped consumers an advance -- with exorbitant interest rates -- on their paychecks. For years consumer advocates have pushed for more regulations on the payday loan industry, arguing that these firms are in fact predatory lenders that trap the working poor in a cycle of debt.
Now a new study released today by the North Carolina-based research nonprofit Center for Responsible Lending found that race and ethnicity is the leading factor in determining payday lender locations. In essence that means minority communities are the largest targets of these predatory lending operations.
Payday loan stores are nearly eight times more concentrated in California's African-American and Latino neighborhoods as compared to white neighborhoods, draining these communities of some $250 million in payday loan fees annually, according to the new CRL study. Even after accounting for factors like income, education and poverty rates, CRL still found that these lenders are 2.4 times more concentrated in African-American and Latino neighborhoods.
Putting a cap on the industry
The payday lending firms claim they are providing a needed, short-term service to the working poor. But studies have shown that every year payday lenders strip $4.2 billion in excessive fees from Americans who think they're getting a two-week loan and end up trapped in debt. Borrowers end up paying more in interest - at annual rates of 400 percent (about 20 times the highest credit card rates) - which is much more than the amount of the loan they originally borrowed.
The good news is that state legislatures across the country are taking steps to regulate payday loans; hundreds of bills pertaining to such lenders have been introduced in more than 30 states in the past two years. In all, fifteen states and the District of Columbia have either capped rates leading to payday lenders shutting their doors or banned them outright.
In fact the South has led the charge in cracking down on the $28-billion industry. Georgia and North Carolina have already banned the practice. States like Virginia have passed reforms that help borrowers. This week Kentucky Governor Steve Beshear signed into law a ten-year moratorium on new payday lenders in the state. State legislatures in Texas have filed legislation that would mean greater transparency in the lending industry, cap interest rates at 36 percent, and close loopholes in state law that allow lenders to bypass tighter regulation. An intense battle is currently taking place in the South Carolina over reform legislation.
One long-term solution, consumer advocates like CRL argue, is for stronger federal legislation that would put a 36 percent cap on interest rates, which is the same cap that Congress already has in place for military families. A bill with a 36 percent cap has been introduced in the U.S. Senate (S500) and House (H.R. 1608), and would not prohibit states from instituting their own caps.
Source:http://www.pww.org/article/articleview/15042/
Sunday, January 18, 2009
Blank cheque for the banks: Billions more taxpayers' cash at risk in new bail-out as Brown pledges support for toxic loans
British banks will take a further step today towards full-scale nationalisation.
Gordon Brown will put hundreds of billions of pounds more at risk in a last throw of the dice to try to save the economy.
Taxpayers - who have already stumped up £37billion to bail out High Street banks - will now be asked to underwrite the reckless loans they have made.
The latest bank rescue deal could take Mr Brown's total commitment to solving the banking crisis to almost £1trillion (£1,000billion) in taxpayers' money either spent or pledged since the credit crunch began in 2007.
Banks that have not yet taken public cash, including Barclays and HSBC, are expected to give up shares to the state in exchange for taking part in the loan guarantee scheme.
And taxpayers are expected to increase their stake in the troubled Royal Bank of Scotland to more than 70 per cent. A huge range of initiatives to be unveiled today by the Prime Minister and Chancellor Alistair Darling is expected to include:
* A 'pay-as-you-go' insurance scheme, which will see an uncapped amount of 'toxic' bank debt underwritten by the public purse;
* A £100billion plan to kick-start mortgage lending;
* A £250billion credit guarantee scheme underwriting the risk of banks' lending to each other, due to expire in April, extended at least to the end of this year;
* A separate project, allowing banks to swap loans for Government bonds, also extended;
* The rules of last year's bank bailout torn up so they have more freedom to start lending again
The package represents a huge political headache for Mr Brown, with polls yesterday suggesting the 'bounce' he enjoyed in response to his initial handling of the financial crisis has come crashing to an end.
Opposition MPs will seize on the new bail-out as evidence that last year's part-nationalisation was a hugely expensive flop. Taxpayers are also likely to resent being asked to shoulder the risk for dodgy lending by banks - much of it made overseas.
The loan scheme is likely to have a dramatic impact on the public finances, sending liabilities spiralling still higher.
But the Government is convinced that another massive taxpayer-backed bail-out is the only way to get credit flowing to families and businesses and unfreeze the lifeblood of the economy.
Officials and ministers worked through the weekend to hammer out details of the package, with the Chancellor seeing bank chiefs for a series of crisis meetings.
Huge stock market falls on Friday, triggered by fears that banks are poised to admit vast losses and write-offs, added to the sense of urgency.
The Prime Minister, in the Middle East for talks on Gaza, said: 'My first priority is hard-working families who are worried about whether they can afford or get a mortgage and businesses who work hard every day to employ people.
'They need credit and lending to be made. They need the banks to do the job that the banks say they are there to do. What we want to see is for businesses to get the money they need to create jobs and secure any for the future.
'What I want to see is people having access to mortgages at prices they can afford. That's what tomorrow's programme is all about.'
Officials insisted it was not possible to put a figure on how much taxpayers' money will be at risk in the loan guarantee scheme, despite suggestions that it could be as much as £200billion. They said the Government was not putting any limit on the amount which could be underwritten. The total will depend on how many banks take part.
The scheme will see the taxpayer agreeing to underwrite loans which banks fear are at risk of default. The insurance will mean the banks' losses on bad loans being limited.
Instead, the taxpayer will shoulder the burden for decades to come and pick up the bill if families or businesses are unable to pay back the money they have borrowed.
Banks will have to pay a fee, which could be in cash or shares in their businesses, for the cover. They will have to gave 'contractual' commitments to lend more in the future in exchange for taking part.
Ministers consider this system better than a state-owned 'bad bank' - which they have all but ruled out - because there would not be the need to find billions of pounds up front.
An announcement is also expected on new guarantees for mortgage-backed securities.
The Government will take steps directly to stimulate fresh lending in the mortgage market where a shortage of affordable loans is contributing to a crash in house prices.
Northern Rock, the fully nationalised bank, will be made to shake up its business model. Rather than shrinking mortgage lending, ministers want it to increase it again, subject to approval from the EU.
Liberal Democrat Treasury spokesman Vince Cable urged the Government to 'bite the bullet' and take full control of the banks.
'At the moment, large numbers of excellent British companies are unable to raise credit,' he said.
'The Government must bite the bullet on the public ownership and control of the banks to ensure that lending is maintained to sound companies who can keep the economy ticking over in these turbulent times.
'They should not be made to suffer because the banks have had a collective stroke. Getting the banks lending effectively, efficiently and quickly again is the key to avoiding a serious recession the like of which we haven't seen for a generation.'
John McFall, Labour chairman of the Commons Treasury Committee, said the Government had little alternative to the new rescue plan.
'We have got to go back again with a bigger sum because the banks in my opinion haven't been honest enough about the toxic assets on their books.'
Justin Urquhart Stewart, of Seven Investment Management, said: 'I think we are now inexorably heading towards taking over the balance sheets of the big beasts.'
source : http://www.dailymail.co.uk/news/
Gordon Brown will put hundreds of billions of pounds more at risk in a last throw of the dice to try to save the economy.
Taxpayers - who have already stumped up £37billion to bail out High Street banks - will now be asked to underwrite the reckless loans they have made.
The latest bank rescue deal could take Mr Brown's total commitment to solving the banking crisis to almost £1trillion (£1,000billion) in taxpayers' money either spent or pledged since the credit crunch began in 2007.
Banks that have not yet taken public cash, including Barclays and HSBC, are expected to give up shares to the state in exchange for taking part in the loan guarantee scheme.
And taxpayers are expected to increase their stake in the troubled Royal Bank of Scotland to more than 70 per cent. A huge range of initiatives to be unveiled today by the Prime Minister and Chancellor Alistair Darling is expected to include:
* A 'pay-as-you-go' insurance scheme, which will see an uncapped amount of 'toxic' bank debt underwritten by the public purse;
* A £100billion plan to kick-start mortgage lending;
* A £250billion credit guarantee scheme underwriting the risk of banks' lending to each other, due to expire in April, extended at least to the end of this year;
* A separate project, allowing banks to swap loans for Government bonds, also extended;
* The rules of last year's bank bailout torn up so they have more freedom to start lending again
The package represents a huge political headache for Mr Brown, with polls yesterday suggesting the 'bounce' he enjoyed in response to his initial handling of the financial crisis has come crashing to an end.
Opposition MPs will seize on the new bail-out as evidence that last year's part-nationalisation was a hugely expensive flop. Taxpayers are also likely to resent being asked to shoulder the risk for dodgy lending by banks - much of it made overseas.
The loan scheme is likely to have a dramatic impact on the public finances, sending liabilities spiralling still higher.
But the Government is convinced that another massive taxpayer-backed bail-out is the only way to get credit flowing to families and businesses and unfreeze the lifeblood of the economy.
Officials and ministers worked through the weekend to hammer out details of the package, with the Chancellor seeing bank chiefs for a series of crisis meetings.
Huge stock market falls on Friday, triggered by fears that banks are poised to admit vast losses and write-offs, added to the sense of urgency.
The Prime Minister, in the Middle East for talks on Gaza, said: 'My first priority is hard-working families who are worried about whether they can afford or get a mortgage and businesses who work hard every day to employ people.
'They need credit and lending to be made. They need the banks to do the job that the banks say they are there to do. What we want to see is for businesses to get the money they need to create jobs and secure any for the future.
'What I want to see is people having access to mortgages at prices they can afford. That's what tomorrow's programme is all about.'
Officials insisted it was not possible to put a figure on how much taxpayers' money will be at risk in the loan guarantee scheme, despite suggestions that it could be as much as £200billion. They said the Government was not putting any limit on the amount which could be underwritten. The total will depend on how many banks take part.
The scheme will see the taxpayer agreeing to underwrite loans which banks fear are at risk of default. The insurance will mean the banks' losses on bad loans being limited.
Instead, the taxpayer will shoulder the burden for decades to come and pick up the bill if families or businesses are unable to pay back the money they have borrowed.
Banks will have to pay a fee, which could be in cash or shares in their businesses, for the cover. They will have to gave 'contractual' commitments to lend more in the future in exchange for taking part.
Ministers consider this system better than a state-owned 'bad bank' - which they have all but ruled out - because there would not be the need to find billions of pounds up front.
An announcement is also expected on new guarantees for mortgage-backed securities.
The Government will take steps directly to stimulate fresh lending in the mortgage market where a shortage of affordable loans is contributing to a crash in house prices.
Northern Rock, the fully nationalised bank, will be made to shake up its business model. Rather than shrinking mortgage lending, ministers want it to increase it again, subject to approval from the EU.
Liberal Democrat Treasury spokesman Vince Cable urged the Government to 'bite the bullet' and take full control of the banks.
'At the moment, large numbers of excellent British companies are unable to raise credit,' he said.
'The Government must bite the bullet on the public ownership and control of the banks to ensure that lending is maintained to sound companies who can keep the economy ticking over in these turbulent times.
'They should not be made to suffer because the banks have had a collective stroke. Getting the banks lending effectively, efficiently and quickly again is the key to avoiding a serious recession the like of which we haven't seen for a generation.'
John McFall, Labour chairman of the Commons Treasury Committee, said the Government had little alternative to the new rescue plan.
'We have got to go back again with a bigger sum because the banks in my opinion haven't been honest enough about the toxic assets on their books.'
Justin Urquhart Stewart, of Seven Investment Management, said: 'I think we are now inexorably heading towards taking over the balance sheets of the big beasts.'
source : http://www.dailymail.co.uk/news/
Saturday, December 20, 2008
Fed provides details of upcoming auctions
The Federal Reserve on Friday released a schedule of upcoming auctions that allow squeezed banks to obtain short-term cash loans to help them cope with the global credit crisis.
The Fed will conduct six auctions in the first three months of next year. Auctions conducted on Jan. 12, Feb. 9, and March 9 give banks the opportunity to obtain 28-day loans. Auctions conducted on Jan. 26, Feb. 23, and March 23 allow banks to get 84-day loans.
To ease the severe credit crunch, the Fed last December launched the program to give banks a new way to get short-term loans and help them over the credit hump. A lockup in lending between banks, and to businesses and consumers, has aggravated the economy's problems, throwing the country into a recession.
The Fed has been working closely with other central banks to coordinate the relief efforts. The Bank of England, Bank of Japan, European Central bank and Swiss National Bank also announced schedules for similar auctions.
But citing weakening demand, the ECB also said it would discontinue euro-dollar foreign exchange swaps at the end of January. The ECB added that if conditions warranted, the swaps could be resumed.
source : http://www.google.com/hostednews/ap/article/ALeqM5hHY9_2T5594LdVhBsC-c1nfqlkJgD955QCGG0
The Fed will conduct six auctions in the first three months of next year. Auctions conducted on Jan. 12, Feb. 9, and March 9 give banks the opportunity to obtain 28-day loans. Auctions conducted on Jan. 26, Feb. 23, and March 23 allow banks to get 84-day loans.
To ease the severe credit crunch, the Fed last December launched the program to give banks a new way to get short-term loans and help them over the credit hump. A lockup in lending between banks, and to businesses and consumers, has aggravated the economy's problems, throwing the country into a recession.
The Fed has been working closely with other central banks to coordinate the relief efforts. The Bank of England, Bank of Japan, European Central bank and Swiss National Bank also announced schedules for similar auctions.
But citing weakening demand, the ECB also said it would discontinue euro-dollar foreign exchange swaps at the end of January. The ECB added that if conditions warranted, the swaps could be resumed.
source : http://www.google.com/hostednews/ap/article/ALeqM5hHY9_2T5594LdVhBsC-c1nfqlkJgD955QCGG0
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