The Indiana Assets & Opportunity Network has previously written about children’s savings accounts (CSAs) as a promising strategy to encourage low- to moderate-income children to pursue education after high school.[1] CSAs are gaining prominence nationwide as an asset building strategy that both motivates savings behavior and is associated with improved educational expectations, socioemotional development, college access, and academic success.

The Asset Funders Network (AFN) will soon release a report on private sector investment in CSA programs. A preview of the report shows growing interest in the field as reflected by generous funding awarded to active, as well as emerging, CSA programs. By the end of 2016, 313,000 children in 29 states were enrolled in CSAs—a 39 percent uptick from 2015’s end. This growth has been facilitated, in large part, by private sector investment.  

Though public sector investment in CSAs is significant, private sector investment surpasses it. 41 percent of CSAs received funding from a public source in 2015-16. Notable examples include the Kindergarten to College program started in 2011.[2] Meanwhile, 71 percent of CSAs received funding from a foundation and more than 40 percent received funding from corporations or businesses. Together, private sector investments in 2015-16 totaled $36.5 million.

Indiana has been competitive nationally in terms of attracting funders. Promise Indiana, a statewide CSA program, amassed $1,659,154 in private funding in 2015-16. This figure combines the revenue streams of all of Promise Indiana’s 14 sites, and ranks them first in the Great Lakes Midwest Region and fifth nationally by private funding amount of any CSA program. They have the highest number of funders (55) compared to the other top 5 CSA programs (6, 1, 4, and 6), suggesting they’ve received smaller median contributions than their peer programs.

Foundations and financial institutions, including banks and credit unions, were the largest private sector funders. Foundations make up more than 50 percent of funders (56 out of 110) while financial institutions make up more than 26 percent of funders (29 out of 110). 20 different community foundations invested in CSAs in 2015-16. Notably, 13 of the 14 Promise Indiana sites received investment from community foundations. These include Benton CF, Blackford County CF, Central Indiana CF, Community Foundation of Whitley County, Howard County CF, Kosciusko County CF, LaGrange County CF, Lawrenceburg County CF, Marshall County CF, Noble County CF, Northern Indiana CF, Portland Foundation, and Steuben CF.

Other identified Promise Indiana funders include the Olive B. Cole Foundation, Lilly Endowment, Parkview Health, the Charles Steward Mott Foundation, and Wells Fargo.

As we approach the holidays consider being a “champion” for a child in your life. Organizations such as BlackRock Financial Institutions Group, LEAF College Savings, and Gift of College allow family members, friends, and community members to buy gift cards only redeemable in a 529 CSA. Even if the gift recipient doesn’t already have a 529 CSA, parents are more likely to be aware of, and start, a 529 CSA for their child in order to obtain value from the gift.

Give the gift of education this holiday season and be sure to check out AFN’s upcoming report!

About the Asset Funders Network (AFN):

The Asset Funders Network (AFN) is a membership organization of national, regional, and community-based foundations, and grantmakers strategic about using philanthropy to promote economic opportunity and financial security for low- and moderate-income Americans.

AFN works to increase the capacity of its members to effectively promote economic security by supporting efforts that help low- to moderate-income individuals and families build and protect assets.

Through knowledge sharing, AFN empowers foundations and grantmakers to leverage their resources to make more effective and strategic funding decisions, allowing each dollar invested to have greater impact.

[1] Education after high school may consist of four-year college, vocational training, etc.

[2] Kindergarten to College is a universal, automatic-enrollment CSA program operated by San Francisco city-county government and San Francisco public schools.

In early October, the Consumer Financial Protection Bureau (CFPB) finalized a rule that would mitigate the harms of payday lending by requiring lenders to determine a borrower’s ability to repay before issuing a loan or limiting the number of loans made without conducting such a test. Advocates and borrowers alike praised the rule—developed after five years of study and public comment—as a positive step forward. But last Friday, six members of Congress introduced a bill that would nullify the CFPB’s rule.

Rep. Dennis Ross (R-Fla.) introduced the bill, which is also co-sponsored by Rep. Alcee Hastings (D-Fla.), Tom Graves (R-Ga.), Henry Cuellar (D-Texas), Steve Stivers (R-Ohio), and Collin Peterson (D-Minn.). The rule is designed to protect borrowers from becoming ensnared in a debt trap—a common outcome for those taking out high-cost loans. In Indiana, 60 percent of payday borrowers take out a new loan the same day they pay off the previous loan; within 30 days, the reborrowing rate rises to 82 percent. Reborrowing a two-week, $300 loan six times—which is the number of back-to-back loans a borrower can currently take out before a "cooling off period" applies—costs over $250 in fees in Indiana.

Though the rule would mitigate the harms of payday lending, members of Congress introduced this bill, which would, with a simple majority vote in both chambers, repeal the rule and erect barriers to prevent the CFPB from addressing these toxic products in future rulemaking.

“Veterans and those currently serving in our Armed Forces are very vulnerable to make irrational decisions when under stress from upcoming or past experiences. Borrowing money is one of those areas where poor decisions have gotten these Hoosiers into a debt spiral where the outcome ends in bankruptcy, divorce, crime, and homelessness . . . Limits are needed on the number of consecutive loans, total cost of loans, and interest rates”, said Brigadier General James Bauerle of the Indiana Military / Veterans’ coalition.

They, and other organizations, highlighted that the payday industry business model relies on repeat borrowing of unaffordable loans; 75 percent of all payday loan fees are generated from borrowers stuck in more than 10 loans a year. This type of lending leaves people without funds to pay bills, strips them of their bank accounts, and increases their likelihood of bankruptcy. The practice costs Indiana families an estimated $70 million per year in fees for loans with interest rates that average 382 percent annual interest.

“Given the problems that 382 percent APR loans have created for low-income borrowers and communities in Indiana, no congressperson representing Hoosiers should vote to roll back the CFPB’s payday rule”, said Erin Macey, Policy Analyst at the Indiana Institute for Working Families. She added that lawmakers should further strengthen borrower protections by capping interest rate on payday loans—something the CFPB was statutorily prevented from doing. In conjunction, these measures could protect borrowers from predatory lenders who often profit from consumers’ distress and unfamiliarity with complex financial products.

The Consumer Bureau's rule is supported by more than 70 percent of Republicans, Independents and Democrats.

Following Richard Cordray’s resignation from his role as Director of the Consumer Financial Protection Bureau (CFPB), two people are clamoring to assume his post. Leandra English, formerly the CFPB’s Chief of Staff and promoted to Deputy Director by Cordray at the Eleventh Hour, asserts she is the rightful acting director, according to procedure established in the 2010 Dodd-Frank and Wall Street Reform Act. Meanwhile, President Trump named Mick Mulvaney, Director of the Office of Management and Budget (OMB), acting director, according to procedure established in the 1998 Federal Vacancies Reform Act. The acting director would serve in the interim while the President appoints a permanent director, which the Senate must confirm in a simple majority vote. 

English, who has helped lead the Bureau since its inception in 2011, and Mulvaney, who once called the Bureau a “sick, sad joke”, embody widely different visions regarding the future of the agency.

The agency’s founding purpose was to empower a single regulator to protect financial consumers in an area where consumers’ vulnerability from predatory financial products and services — often perpetrated by powerful institutions — is high and consumers have little recourse if wronged. The agency has won numerous successes, including reforming mortgage lending, curtailing abusive debt collection practices, and investigating hundreds of thousands of complaints from aggrieved customers of financial institutions.

In spite of, or perhaps because of, the CFPB’s track record of success, it has attracted many opponents, including the person President Trump has tapped to head the Bureau in the interim. “I don’t like the fact that the CFPB exists”, Mulvaney said in 2015 at a House hearing; while serving as a Republican congressman, he also co-sponsored legislation to eliminate the agency. President Trump will likely appoint a permanent director that, like Mulvaney, is hostile to the CFPB’s basic mission.

Politics aside, legislative analysis has produced mixed understanding of who should serve in the interim.  Press Secretary Sarah Huckabee Sanders said that the legality of Mulvaney’s appointment was confirmed by the White House counsel’s office, the Justice Department, and the agency’s own general counsel, who was appointed by Mr. Cordray. However, others, including Senator Elizabeth Warren, architect of the CFPB, defended English as the rightful acting director. “Dodd-Frank is quite specific: It provides its own succession planning”, Warren said. “There is no vacancy for President Trump to fill”. Though on Twitter she did affirm the President’s authority to appoint a permanent director.

On their first day of work, in emails to staff, both English and Mulvaney signed off as “Acting Director”.

The controversy over whether English or Mulvaney is the rightful acting director centers on two statutory provisions within the Federal Vacancies Reform Act and the Dodd-Frank and Wall Street Reform Act. 5 U.S.C § 3345 (part of the Federal Vacancies Reform Act) and 12 U.S.C. § 5491 (part of the Dodd-Frank Act) appear to contain contradictory language; and a legal battle has commenced regarding which Act supersedes the other.

The argument that Mulvaney is the rightful acting director of the CFPB rests on 5 U.S.C. § 3345, which provides that when a Senate-confirmed officer in an executive agency “dies, resigns, or is otherwise unable to perform the functions and duties of the office”, the First Assistant to that office automatically becomes the acting officer, unless the President designates someone else.

The argument that English is the rightful acting director of the CFPB rests on 12 U.S.C. § 5491, which provides that the Deputy Director of the CFPB shall “serve as acting director in the absence or unavailability of the Director”.

Critics have argued that “absence” and “unavailability” do not describe a vacancy caused by a director’s resignation. Though the language may be vague, some have indicated that the current language replaced former language which expressly deferred to the Federal Vacancies Reform Act. Adam Levitin, a law professor at Georgetown University, argued that the legislative history of Dodd-Frank supplies that English is the rightful acting director. Levitin writes:

The version of the Consumer Financial Protection Act that originally passed the House was very clear that the Federal Vacancies Reform Act applied. It stated that “In the event of vacancy or during the absence of the Director (who has been confirmed by the Senate pursuant to paragraph (2)), an Acting Director shall be appointed in the manner provided in section 3345 of title 5, United States Code.” Section 3345 of title 5 is the Federal Vacancies Reform Act. The quoted language didn’t make it into the enacted version of the legislation. Instead, the conference committee that reconciled the House and Senate bills adopted the language in the Senate bill, about “absence or unavailability.” In other words, Congress knew very well how to say that the Federal Vacancies Reform Act applies … but ultimately decided that it would not apply.

At the heart of the controversy lays another dispute. More broadly, the independence of financial regulators is at stake. Although critics have long derided the organizational structure of the CFPB, which vests power in a single director, it was designed to be an independent agency. Brookings published an article asserting that by appointing a senior White House official to head the CFPB, even in the interim, President Trump undermined one of the basic principles of modern financial regulation: the independence of financial regulators. The CFPB is part of the Federal Reserve System and is a voting member of other key financial regulators; considering this, the pro-English camp argued that it may be illegal for the Director of the OMB to concurrently serve as the Director of the CFPB.

The fisticuffs taking place at the Bureau recently made its way to the courtroom. On Sunday, English filed a lawsuit against Trump and Mulvaney calling for a temporary restraining order to block Mulvaney from taking over. The suit, English v. Trump, was assigned to Judge Timothy Kelly, a Trump appointee confirmed by the Senate 94-2 in September. On Tuesday, Kelly denied the temporary restraining order siding with the Trump administration in the legal fight. “Denying the President’s authority to appoint Mr. Mulvaney raises significant constitutional questions”, Kelly said. He continued by explaining that nothing in the statutes expressly forbids Mulvaney from holding both CFPB and OMB Director positions.

Deepak Gupta, English’s lawyer, acknowledged the “loss”, but promised the ruling would “not be the final answer”. Regardless of the outcome of the legal battle currently underway, a protracted struggle is likely to occur between CFPB critics and advocates when President Trump appoints a permanent CFPB Director. We can only hope they are a champion for consumers, not a Wall Street crony.

House Republicans unveiled their tax plan on Thursday, prompting debate between advocates and adversaries about whom the plan most benefits. Paul Waldman writes in an opinion-editorial for The Washington Post that the “two competing narratives” about the plan remain unchanged. Critics argue the plan favors the wealthy and corporations at the expense of the majority of Americans; supporters that it promotes economic growth that will trickle down.

Which narrative is true? According to the orthodoxies of neoliberalism, regulation (e.g. taxes) impedes economic growth—less innovation, less demand for labor, less money for workers. Accordingly, House Republicans have proposed the largest reduction in the U.S. corporate tax rate in our nation’s history—from 35 to 20 percent. The Trump Administration has argued that 70 percent or more of corporate tax cuts would accrue to workers (in the former of bigger paychecks).

That’s speculative. Unless the government increased the minimum wage or capped the CEO-worker pay ratio, enforcement mechanisms to guarantee “trickle down” are nonexistent. Where the money trickles is thus within the domain of company discretion.

The New York Times reported that the reduction in the corporate tax rate is “the most expensive change in the bill” and is estimated to cost the federal government $1.5 trillion over the coming decade. According to Jacob Leibenluft of the Center on Budget and Policy Priorities (CBPP), lowering taxes on corporations and the wealthy is the centerpiece of the bill. “They started with a set of big tax cuts they want to give, and those tax cuts are overwhelmingly weighted toward the wealthy,” he said. “And then I think the rest of the bill is designed to solve a math problem.”

The math problem follows: How can the federal government shrink the deficit—at minimum, not grow it—if its coffers are starved of corporate revenue? The politicians tasked with solving the equation have chosen to reduce funding toward other expenditures—often, away from social safety net programs. “The drop in federal revenues will jeopardize critical investments in education, healthcare, and social services for tens of millions who need them most,” said Andy Stettner of The Century Foundation.

Additionally, the plan limits deductions that may lower the amount some filers’ pay. Though the plan doubles the standard deduction (thus limiting taxable income), other deductions, such as the student loan interest deduction, the large medical expenses deduction, the personal deduction, and the state and local taxes deduction are on the chopping block. The elimination of the state and local tax deduction will overwhelmingly burden high tax states (e.g. California and New York), sparking dissent even among these states’ Republican representatives.

Still, supporters of the plan tout the potential of trickle down economics to improve ordinary Americans’ standard of living. Earlier this year, Gary Cohn, Director of the National Economic Council and chief economic advisor to the President, notably said that under the new plan the typical family with two children earning $100,000 (median household income is $59,000) will be able to “renovate their kitchen, buy a new car, take their family on vacation, increase their lifestyle.” Being that the average middle-class taxpayer only stands to gain $940 in tax cuts (an amount insufficient to accomplish that which Cohn suggests), we’re meant to believe massive growth will improve standard of living. Yet research consistently shows that in the absence of redistribution mechanisms, inequality grows and grows and grows; growth takes a secondary role.

Despite the President’s claim that “the rich will not be gaining at all with this plan,” economic analysis demonstrates that savings would disproportionately accrue to the wealthy. The Tax Policy Center predicts that nearly three-quarters of the savings from the tax overhaul would go to the top 20 percent of earners (with incomes above $149,000). Further, more than half of the savings would accrue to the top 1 percent (with incomes above $732,800). By the tenth year of the tax overhaul, savings would benefit the wealthy even more—the top 1 percent reaping 80 percent of savings.

Mark-up of the bill is scheduled for Monday. Lobbyists and special interest groups from both sides of the aisle are likely to propose changes to the bill before it moves to the House for a vote. Contact your legislator to demand tax reform that works for all Americans.

Call your legislator here.

Sources

Tankersley, Jim; Kaplan, Thomas; Rappeport, Alan. “Republican Plan Delivers Permanent Corporate Tax Cut.” The New York Times, 2 Nov. 2017.

Parlapiano, Alicia. “Six Charts That Help Explain the Republican Tax Plan.” The New York Times, 2 Nov. 2017.

Lobosco, Katie. “House tax plan would kill the student loan interest deduction.” CNN, 3 Nov. 2017.

Waldman, Paul. “The new GOP tax plan proves it: The problem isn’t just Trump. It’s Republicans.” The Washington Post, 2 Nov. 2017.

Horsley, Scott. “Touted As Middle Class Win, GOP Tax Plan Directly Benefits Wealthy, Analysis Finds.” National Public Radio, 4 Oct. 2017.

Kearney, Laila. “Republican tax plan a blow to Democratic states, officials say.” Reuters, 2 Nov. 2017.

Robinson, Jenice. “The Data Belie the Trump-GOP Tax Cut Rhetoric.” Institute on Taxation and Economic Policy, 5 Oct. 2017.

Kochkodin, Brandon. “Here’s What Executives Are Saying About the Republican Tax Plan.” Bloomberg, 27 Oct. 2017.

Picchi, Aimee. “GOP tax plan: 5 ways the proposed tax cuts could impact you.” CBS, 2 Nov. 2017.

This guest blog was prepared by governing committee member Erin Macey, Policy Analyst, Indiana Institute for Working Families.

You have probably signed one. Not too long ago, I signed one while securing a car loan. "I don't want to sign this," I said, when I saw the page titled "arbitration clause" laid down in front of me. "Is this negotiable?" "No," the loan officer responded, before assuring me that it would just make any disputes quicker and easier to resolve. 

Quicker and easier for whom? Arbitration clauses have been slipped into the contracts for many financial products and services—credit cards, payday loans, even the recent Equifax credit monitoring service offered in the wake of the data breach—and these clauses limit consumers' options for addressing legal issues with their providers by requiring that the matter be addressed with a private arbitrator rather than in the courts. Meanwhile, a report from the PEW Charitable Trusts demonstrates consumers' belief in fair reconciliation of consumer disputes. They found that 95 percent of consumers said they should have the right to have their cases decided by a judge or jury while 89 percent supported consumers' right to participate in group lawsuits. Group lawsuits are important as many individuals will not pursue relief on their own, especially when the harms are small yet often repeated many times over. Arbitration clauses are also tucked into employment agreements, making it more difficult to bring discrimination or wage and hour cases forward.

The Consumer Financial Protection Bureau recently issued a rule to ban mandatory arbitration clauses for financial services. Opponents of the rule argue that consumers receive greater relief in arbitration, winning on average $5,389 as opposed to an average of $32 in class action lawsuits. However, these statistics ignore the reality that only consumers with significant damages pursue relief through arbitration and very few win. According to a CFPB study, millions of consumers obtain relief through class action lawsuits each year while many fewer (some reports estimate as few as 20 people annually) receive relief in arbitration.

In July, the House voted to roll back the CFPB's rule (see how your House representative voted here). Now, the Senate has followed suit. On Tuesday, October 24 at 9:46 p.m. Vice President Mike Pence broke a 50-50 tie, thus, overturning the CFPB rule which would have allowed American consumers to file class-action lawsuits against financial institutions (see how your Senator voted here).

Many people, including these 400+ college professors, believe that class action is an important tool to deter financial institutions from mistreating consumers and to provide relief when they cause harm. Yet consumers are now barred from having their day in court.

Express your thanks or frustrations by calling or writing your lawmakers.

Call your lawmakers at the Capitol Switchboard: (202) 224-3121

Write your lawmakers at DEMOCRACY.IO

On Thursday, October 5, the Consumer Financial Protection Bureau (CFPB) issued a rule that will reduce the harms of payday lending in Indiana. On a press call Friday, October 6, advocates from the Indiana Assets & Opportunity Network, representatives of faith and military / veterans’ organizations, and a payday borrower spoke in favor of the rule, but noted that the CFPB did not have the authority to change the cost of payday loans. They called on Indiana lawmakers to take further action to lower the interest rate – currently capped at 391% APR. 

The Consumer Bureau’s rule requires lenders to evaluate a borrower's ability to repay a payday loan and still meet their basic needs before issuing such loans. The rule also allows lenders to issue a limited number of loans to a borrower if they choose not to conduct ability-to-repay tests. This will reduce the cycle of debt that is common with payday loans – the average borrower takes 9 or 10 loans per year, paying over $400 in interest to repeatedly borrow $300. These loans drain Indiana's economy of $70 million per year solely in abusive fees.  

The rule provides exemptions; one of which permits lenders issuing conventional payday loans of up to $500 to forgo the full-payment test if successive loans are two-thirds that of the previous loan. While this partially limits potential consumer harm associated with unaffordable loan payments, the fundamental problem of egregious interest rates, coupled with lack of evaluating ability to repay, persists.

The rule is currently set to take effect in 21 months, but advocates anticipate a long fight ahead. The House and Senate will likely try to roll back the rule, putting the financial well-being of working families at risk. Time and again, the industry has leveraged its profits so that it enjoys special privileges. Indiana’s congressional delegation and state lawmakers must prioritize the needs of their constituents, not those of the payday loan industry. 

Transcribed statements from the press call can be found below and the full CFPB rule can be found here. 

Statements on the CFPB’s Payday Loan Rule

(audio recording available upon request)

Erin Macey, Indiana Institute for Working Families and co-lead of the Indiana Assets & Opportunity Network

After five years of research and stakeholder input, including letters of support from many of us here in Indiana, the Consumer Financial Protection Bureau issued a final rule to begin to address the harms of payday lending. Indiana Institute for Working Families, the Indiana Assets & Opportunity Network, and others on this call have eagerly awaited this important step forward.  

The fact that the CFPB’s rule asks lenders to assess a borrower’s ability to repay a loan addresses the fundamental problem with the payday lending model: these loans are made to low- and moderate-income borrowers without regard to their financial situation effectively trapping them in a very costly cycle of debt. The average payday borrower takes 9 to 10 loans per year, paying over $400 in interest to repeatedly borrow $300. Sixty percent of borrowers in Indiana take out a new loan the SAME DAY that their old loan is due–and by the time rent is due, more than 8 in ten have taken a new loan.

While we applaud the CFPB for taking this step and ask that our Congressional delegation support the rule, the CFPB does not have the authority to address the interest rate of payday loans. 391% APR is usury. We now look to our state lawmakers to establish reasonable caps on lending that promote safe and affordable access to credit and keep borrowers out of the debt trap.

Mary Lee McKenzie, former payday borrower from Southeastern Indiana

These businesses promote this as a short term fix, but actually it can become a life time involvement once you do a cash advance and you think you can pay off the loan in two weeks–that just does not happen.  Something else will arise and you just pay the fee and try to get through the next two weeks and hope you can pay it off.  It continues into a cycle where the fee becomes part of your budget. 

Personally, I am a college graduate with a good job.  I have been on my job for 14 years.  However, I have been divorced for 16 years.  My ex-husband did not pay his portion of the debt and it came back on me.  He also was always behind on child support and did not pay the other obligations he was required to pay in the divorce.  This made it a daily struggle to survive.  When one is in a situation and there are children involved, you do what can get you through the moment, the hour, and the day. 

Payday loan businesses have gotten me into a mess!  They do not meet your short term needs.  These businesses become a lifetime ball and chain that will drag a person into a worse financial situation than they were in the day before.   

I personally could not have gotten out of this cash advance cycle unless it was someone who cared enough and lent me the money to get out–actually gave it to me. We need to get a control on these cash advances so they don’t allow such large amounts because a person, when they’re in the situation, they will take a large amount thinking they could pay it back and they can’t.

Glenn Tebbe, Indiana Catholic Conference 

We’re particularly happy that the government has decided to put some safeguards in here for persons who are engaged in this activity. From the Church’s point of view, the state’s responsibility and purpose is to protect and create the common good. The common good is preserved and protected when people are not being taken advantage of. The situation as it exists now–the model–is such that persons in dire straits or certain kinds of situations go after [payday loans] thinking that it can take care of their circumstances but, in reality, the model itself takes advantage of them. From the Church’s perspective, that’s is a violation of the 7th Commandment.

Usury has been condemned from ancient times on. It was in the Bible and all societies have condemned usury. When you take something from someone–and this is unjustly taking in the sense that you’re taking advantage of their circumstance, you’re taking advantage of their unfamiliarity and unsophistication regarding the financial aspects of [payday loans]–we see this as a harm. It harms the person and it harms their family, and ways that we can protect people from that kind of activity is in the best interest of everyone. So we see this as a positive step forward. In fact, we join others in hoping that caps can be put on interest rates. The rate that this model has at 300–almost 400 percent–is definitely in the category of usury.

Maureen Noe, Indiana Association of United Ways

Indiana United Ways and our 60 local United Ways work closely with community- and faith-based organizations that help individuals and their families reach their potential.  Many United Ways fund and support financial stability efforts that help families move from poverty to financial stability.

Through the data released in our ALICE Report, an acronym that stands for Asset-Limited-Income-Constrained-Employed, we know that 36% of Hoosier households are living below the basic cost of living.  We know that ALICE households and other low- to middle- income families may turn to alternative financial products in crisis situations when they need to make ends meet.  Unfortunately, these products often have fees, high interest rates, and terms and conditions that trap people in a cycle of debt.  A short-term financial fix through a predatory product often leaves families with fewer resources to devote towards building assets and reaching financial stability.

Indiana United Ways appreciates the CFPB’s rule to allow additional protections for consumers accessing short-term, small dollar loans.  Additional notices before withdrawals, limitations on the number of loans an individual can access, and better assessment of the consumer’s ability to repay are important steps in the right direction.  Together with our community partners, we will continue to advocate for safe and affordable financial products for Hoosiers.

Brigadier General Jim Bauerle, Indiana Military / Veterans' Coalition

The Military / Veterans' Coalition of Indiana fully supports the idea of limiting interest rates. I provided an article from the Military Times earlier about some of the ways the active duty military and their families are protected and it’s our intent that should something come forward in the Indiana General Assembly this year to create any loan instruments that would exceed 36% APR, we will fight.

Just like other consumers, veterans and those serving in the Guard and Reserves are consumers and need loans. But loans that have interest rates that high are clearly predatory, and they clearly impact the readiness of units and of individuals to serve our military in peace and in war. Those who have served certainly deserve better treatment, and there are better instruments available to them through the state and through the Department of Veterans Affairs if they have an urgent need for support.

We think anything along these lines is not a good thing to do, and we are against anything that attempts to expand it.

Kathleen Lara, Prosperity Indiana and a leader of the Indiana Assets & Opportunity Network

Our members are based in Hoosier cities and towns of all sizes focused exclusively on long-term community prosperity, helping low-income individuals and families attain economic sufficiency, break cycles of poverty, and address blight and foreclosures. 

As you have heard, these high-cost loans trap vulnerable consumers in debt cycles and the effects of this cycle don’t end with the consumer, they have a significant impact on community stability.

Our members are left to try and help consumers repair the financial damage left behind when they were inevitably unable to pay back these loans at exorbitant rates. 

Our members watch payday lenders that are almost exclusively concentrated in low-income communities market their products as easy financial solutions and know that consumers seeking a last-resort hand up are instead likely to end in default or bankruptcy. 

They watch these products drain $70 million in fees from the low-income communities they seek to support. 

They know that the inability for households stuck in high-interest loan debt to pay expenses like rent, transportation, health care, and food directly correlates to the housing instability and foreclosures, bankruptcies, loss of local spending and accordingly, loss of local job creation they work hard to combat.

We provided feedback on the proposed rule and are pleased that the final rule still included important steps forward with regards to considering a consumer’s ability to repay and account withdrawal limits as these are essential to curbing some of the most egregious industry practices.  But, as Erin mentioned, the 391% payday lending rate in our state must be addressed if we want to cut down on loan defaults and re-borrowing that destabilizes financially vulnerable households.

We believe more work must be done at the state level to protect consumers from predatory lending products that hinder not only individual, but community prosperity.

Keith Carlson, Pastor, Outreach & Care, Grace Church

The Consumer Financial Protection Bureau’s payday loan rules being proposed are a step in the right direction.  This predatory industry needs desperately to be regulated so that injustices are not done to the poor and marginalized in our communities.  I would hope that policymakers propose even further regulations regarding both the exorbitant interest rates charged and limiting the total dollar amount they can loan.

Today is the day.

Vice President Mike Pence is in his home state of Indiana right now. Mr. Pence plans to advocate for aggressive tax reform and put pressure on Democratic Sen. Joe Donnelly to support the administration’s tax plan.

The Trump Administration’s proposed tax plan would shortchange working families in Indiana. Andrew Bradley, Senior Policy Analyst, Indiana Institute for Working Families, writes that “added together, the three low- and middle-earning quintiles (making up 60% of Indiana’s population) would only get 11.7% percent of the planned cuts, while the top 1% alone would take home 46.1% of the state’s share of the cuts.”

The Administration sees an opportunity to pressure Donnelly, as well as other Democrats in close 2018 races, to concede on tax reform. 

As Bernie Horn, Senior Director for Policy and Communications, Public Leadership Institute, argues, “reform” doesn’t accurately describe the Administration’s proposed tax plan. “The word ‘reform’ is a value that telegraphs that it refers to something positive. ‘Reform’ means to make changes in something – typically a social, political, or economic institution or practice – in order to improve it,” Horn writes. Instead, we must debate the tax plan in consideration of “fairness.”

Call Senator Donnelly here and Senator Young here to urge them to advocate for the needs of Indiana’s working families. Below (taken from OurFuture.org) is a sample of what you could tell the Senators' representatives:

Our tax system is unfair. Working families are under more and more stress while rich people and large corporations pocket massive tax giveaways, and that’s wrong. The Trump tax legislation makes the system worse by giving away trillions of dollars to the rich. Instead, we need to create a system where everyone pays their fair share—a system that works for all of us, not just the wealthy few.

Thanks for all you do to advocate for #TaxFairness!

A majority in the U.S. House of Representatives once again sided with America’s payday lenders, voting to strip the Consumer Financial Protection Bureau—American consumers’ watchdog—of the authority to regulate this industry. The vote came Thurs., Sept. 14 during the debate over the Financial Services and General Government bill, which funds some basic functions of the federal government, including the Treasury Department.

Payday lenders’ supporters in Congress had slipped language into the bill that would prohibit the CFPB from writing new rules governing the industry or enforcing existing law. The CFPB is expected to release a new rule with protections for payday loan borrowers soon, and the House bill language would put a stop to these protections as well as the CFPB’s ability to hold payday lenders accountable in spite of the fact that 70% of voters including 70% of payday borrowers want to see more regulation of the industry.

Rep. Keith Ellison (D-Minn.) introduced an amendment to take this language out of the appropriations bill and continue to allow the CFPB to regulate payday lenders as it regulates other financial services businesses. The amendment failed by a vote of 221-186, with 26 abstentions. Seven members of Indiana’s delegation voted against the amendment.

“Many Hoosier families have gone to the CFPB with their concerns and complaints about the industry. It is disappointing to see our lawmakers siding with the lenders over Hoosier consumers,” said Erin Macey, policy analyst with Indiana Institute for Working Families and member of the Indiana Assets & Opportunity Network policy committee.

The typical interest rate of a payday loan in Indiana is 382 percent APR, and payday lenders make 75 percent of their profits off of consumers who take out more than ten loans a year. Because these lenders can collect directly from a borrower’s bank account on payday, they can remain profitable even when borrowers cannot afford to repay the loans without defaulting on other financial obligations. Nationally, payday lenders drain $8 billion in fees from our economy every year – an estimated $70 million which comes from Indiana.

Please take two minutes to find out how your member voted here, and send them an email either thanking them, or expressing your disappointment here.

You could also reach your member on Twitter and use the sample tweets below.

• Thanks ADD MEMBER TWITTER for standing with your constituents and the rule of law as the CFPB tries to #StopTheDebtTrap 

• We're disappointed to see you voted to curtail consumer protections ADD MEMBER TWITTER #StopTheDebtTrap

Consider writing a letter to the editor to amplify your voice, as well as spread awareness of the consequences of the Bill in your community. If you write a letter to the editor, please share the letter, and the publication to which you submitted, with us.

Thanks for all you do to #StopTheDebtTrap.

2016 ASSETS & OPPORTUNITY SCORECARD

2016 Assets & Opportunity Scorecard, the leading source for data on household financial security and policy solutions. - Prosperity Now

Read more.

On September 5, 2017, President Trump announced he would repeal the Deferred Action for Childhood Arrivals (DACA) Program. DACA, an Obama-era executive action, protected undocumented immigrants who arrived in the U.S. as minors from deportation and allowed them to apply for a work permit. 

"The mind-boggling cost of DACA repeal," published by Brookings, summarizes the cost of repealing DACA. 90 percent of working age Dreamers are employed and pay an estimated $2 billion in taxes each year. Yet they remain ineligible for the public benefits, such as SNAP and Medicaid, to which citizens are entitled. In addition to the economic contributions that Dreamers make to the U.S. economy, the administrative costs of deporting all, or even some, Dreamers is staggering. Brookings previously reported that the average cost of deporting an undocumented individual is $12,500. If this cost is multiplied by 800,000 (the approximate number of Dreamers in the U.S.), the total cost expended by Immigration and Customs Enforcement (ICE) to deport Dreamers would approach $10 billion. That's double ICE's annual budget of just over $5 billion. 

Beyond the economic contributions Dreamers make to the U.S. economy and the fiscal irresponsibility of repealing DACA—it poses an enormous strain on taxpayers—the repeal of DACA should not be analyzed exclusively through an economic framework. Dreamers—many of whom have never known a home other than the U.S.—have been denied the freedom to live in the U.S. without fear based on their place of birth and skin color. 

DACA recipients, particularly those whose DACA expires before March 5, 2018, are invited to attend a Free DACA Renewal Workshop on September 20, 2017 at 6 p.m at 1400 N Meridian St., Indianapolis, IN 46202. The workshop is hosted by Catholic Charities. 

SEPTEMBER 8, 2017