CALIFORNIA PROGRESSIVE DEMOCRATS SCREW THE POOR ON BEHALF OF THE WEALTHY LIKE TOM STEYER

For all the progressive socialist democrat prattling in Democrat-controlled California about protecting the poor from predatory lending and assisting those they designated as “un-banked,” it is hard to square the truth with proposed legislation …

Assembly Bill A.B. 539 -- California Financing Law: consumer loans: charges (As amended September 4, 2019) [OCS: Like all legislation benefiting those who can afford lobbyists, the language of the bill, although written in English, is formatted in dense legalese which puts it beyond the understanding of ordinary individuals. And, of course, no legislation would be complete without its “weasel-words.” Not to mention the deceptive title“Fair Access to Credit Act,”] (1) The California Financing Law (CFL) provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Business Oversight. The CFL prohibits anyone from engaging in the business of a finance lender or broker without obtaining a license. A willful violation of the CFL is a crime, except as specified. Under existing law, a licensee who lends any sum of money is authorized to contract for and receive charges at a maximum rate that does not exceed specified sums on the unpaid principal balance per month, ranging from 2 1/2 % to 1%, based on the consumer loan amount, as specified. This provision, however, does not apply to any loan of a bona fide principal amount of $2,500 or more, as determined in accordance with a provision governing regulatory ceilings and evasion of the CFL. The CFL also authorizes a licensee, as an alternative to the above-described rate charges for consumer loan amounts, to instead contract for and receive charges at the greater of a rate not exceeding 1.6% per month on the unpaid principal balance or a rate not exceeding 5 5/6 of 1% per month, plus a specified percentage per month, as established by the Federal Reserve Bank of San Francisco, on advances to member banks under federal law, or if there is no single determinable rate, the closest counterpart of this rate. Under existing law, these provisions do not apply to a loan of a bona fide principal amount of $2,500 or more, as specified. The CFL further authorizes a licensee to contract for and receive an administrative fee of a specified amount that varies with the bona fide principal amount of the loan. [OCS: The bill  was sold to the public as capping the interest rate of small loans at 36% plus the federal funds rate. Hard to tell unless you do the math. Additionally, the legislation prohibits a CFL from charging a penalty for prepayment of a consumer loan and establishes minimum loan terms. The actual terms and conditions were never mentioned. Funny, the three largest lenders in the State of California that supported this bill, OneMain, Opportun, and Lendmark, are already in compliance and cap their loans at 36%.] This bill, entitled the Fair Access to Credit Act, would authorize a finance lender, with respect to a loan of a bona fide principal amount of $2,500 or more but less than $10,000, to contract for or receive charges at a rate not exceeding an annual simple interest rate of 36% plus the Federal Funds Rate. The bill would require finance lenders making loans subject to these provisions to, among other requirements, report each borrower’s payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis and to also offer, at no cost to the borrower, a credit education program or seminar that has been previously reviewed and approved by the commissioner, in accordance with specific requirements. The bill would further specify that a licensee may contract for and receive an administrative fee, as described above, in addition to these charges.' [OCS: It should be noted that many of these credit education programs are conducted by groups that can be described as “poverty pimps” with additional organizing efforts on behalf of the Democrat Party. And, you have to love those ill-defined administrative fees.] (2) Under the CFL, certain principles apply in determining whether a loan is a loan of a bona fide principal amount under specified provisions and whether the regulatory ceiling provision is used for purposes of evading the CFL. This bill would apply these principles to loans of a bona fide principal amount of $2,500 or more but less than $10,000. The bill would also apply these principles to any fees paid to a licensee for the privilege of participating in an open-end credit program. (3) Existing law prohibits licensees subject to the CFL from entering into a contract for a consumer loan that provides for a scheduled repayment of principal over more than the maximum terms set forth in relation to the respective size of the loan. Among other things, this provision prohibits a loan of at least $3,000 but less than $5,000 from exceeding a maximum term of 60 months and 15 days. [OCS: There does not appear to be anything that would prevent continuous “roll-overs of principle and interest to evade this provision.]  This bill would increase the maximum principal loan amount under the above schedule to $10,000. The bill would also prohibit a licensee from entering into a contract for a consumer loan that is at least $2,500 but less than $10,000 that provides for a scheduled repayment of principal that is less than 12 months. The bill would also specify that the maximum loan term of 60 months and 15 days does not apply to a loan secured by real property of a bona fide principal amount of at least $5,000. The bill would also prohibit a licensee from charging, imposing, or receiving any penalty for the prepayment of a loan under the CFL, except as specified. (4) The CFL regulates a specific type of consumer loan known as an open-ended loan. The CFL prescribes the amount upon which charges authorized by the CFL may be based, the amount of a minimum monthly payment, the amount of fees, costs, and expenses a licensee may receive, and the amount to be delivered by the licensee at the time the open-ended loan is made. The CFL applies these provisions only to a loan of a bona fide principal amount not exceeding $5,000, as specified. This bill would apply those provisions to an open-ended loan in a bona fide principal amount not exceeding $10,000, as specified. The bill would make conforming and nonsubstantive changes. By expanding the application of the CFL to cover more loans, the bill would expand the scope of an existing crime, thereby imposing a state-mandated local program. [OCS: Many lenders inflate the loans by selling additional products such as sickness and accident coverage, etc.] It is not uncommon for lenders to understate their APR (Annual Percentage Rate) disclosures with these “off book” products. Check for large upfront fees, front-loaded finance charges, non-refundable origination fees, and disproportionate credit insurance coverage that does not adjust with the declining loan balance. Check for differences between the stated and an all-in APR, especially in states that cap interest rates but permit sales of credit insurance in conjunction with the loan and the financing of premiums.]  <Source: California Legislature>

A refresher … 

It used to be that each state had “usury laws” to protect the poor and disadvantaged from the unethical or unlawful loans that unfairly enriched the lender and bled the borrower dry as they were unlikely to be paid off.

In California, “the general maximum interest rate is 7% per year. The rate of 10% per year applies to goods used primarily for personal, family, or household purposes. Other goods have a rate of 10% per year or 5% per year plus the rate established by the Federal Reserve Bank of San Francisco on advances to member banks for loans on other types of goods. The constitutional limits do not apply to obligations of, among others, credit unions.” <Source>

Lay on additional legislation, and the results are extortionate interest rates that keep poor and minority individuals indebted for years. Courtesy of the progressive socialist democrats.

The rich are demonized as they get richer and continue to enjoy access to politicians with their attendant perks and privileges…

Funny, it appears that this bill benefits such rich cats as 2020 presidential candidate and global warming wing-nut Tom Steyer who provided the seed capital for Oportun and Madrone Capital Partners, the private equity firm associated with Rob Walton, the eldest son of Walmart founder Sam Walton. The bill will impose additional regulatory conditions on Oportun’s competitors, possibly driving them out of business.

And if you want further proof that California screws the poor…

As of September 29, 2019, the California DMV is charging a 2.1 percent fee for using a credit or debit card for online registrations and other transactions. It's not enough that state fees have skyrocketed in proportion to its unfunded pension liabilities, but they now gouge you on processing fees. Remember, this is the same virtue-signaling agency the spent millions on new offices to process licenses for illegal aliens. I remember when they sold online services to maximize the efficiency of the DMV and reducing costs. 

Bottom line …

This bill is sitting on California Governor Gavin Newsom’s desk. Like most bills, it was written for the politicians who get money for either supporting or ignoring the bill, and the special interests that contribute most of the bill’s language and provisions.

Once again, we find the progressive socialist democrats talking about assisting the poor, the minorities, and the middle class – only to find they are selling access to their respective offices to the special interests. Not that does not happen with both parties – but it pisses me off that the Democrats claim some form of politically correct moral advantage.

We are so screwed.

-- steve