FOR IMMEDIATE RELEASE

August 22, 2009

Contact: Kristin Schaaf, 515-255-0800, kristin@iowacci.org
David Goodner, 515-282-0484, david@iowacci.org

More than 225 Iowa CCI Members Out Wells Fargo For Funneling Hundreds of Millions of Dollars to Predatory, Payday Lenders At Public Hearing With Federal Reserve

Iowa CCI wins commitment from Fed to respond to all demands in writing within 30 days

Fed officials also agree to convene meeting with Des Moines-area banks to address predatory payday lending as well as viable alternatives like the small dollar loan model developed by Iowa CCI and Bankers Trust

Des Moines, Iowa - More than 225 members of Iowa Citizens for Community Improvement (Iowa CCI) outed Wells Fargo for funneling hundreds of millions of dollars to predatory payday lenders Saturday during a public hearing with Federal Reserve officials in Des Moines.

The unprecedented public hearing with the Federal Reserve was the sixth of nine hearings across the country and was won through direct action after grassroots members of Iowa CCI and other community organizations in the National People's Action network pressured Fed Chairman Ben Bernanke to put people before profits and to work towards an economic recovery and financial regulatory reform that works for all Americans. 

Documents disclosed by Iowa CCI members today show that Wells Fargo has loaned hundreds of millions of dollars to predatory payday lenders Cash America International, Inc., Ace Cash Express, Inc., and others.  This research also shows that payday lenders are overrunning low and moderate-income neighborhoods in Des Moines. 

"Wells Fargo may not be the good corporate citizen it claims to be," said Hugh Espey, Executive Director of Iowa CCI.  "Today, we demanded that the Federal Reserve tell Wells Fargo to stop financing payday lenders."

Payday loans are loans with 400 percent or higher interest rates that are due in full in two weeks.  Iowa CCI members say that these potentially dangerous products trap many customers in a cycle of debt that can be impossible to escape.

Copies of these documents and other research held by Iowa CCI may be requested by contacting staff at the numbers listed above.

At the public hearing, Iowa CCI members demanded that the Fed put its full weight and power behind small-dollar loan programs and other alternatives to predatory lending, interest rate caps and extended repayment periods for payday loans, loan modifications and bankruptcy reforms that keep people in their homes, the establishment of a retirement reimbursement fund for people who lost their life savings, the modernization of the Community Reinvestment Act and the Home Mortgage Disclosure Act, and increased consumer protections through an independent Consumer Financial Protection Agency. 

"I think these are fair requests," said Joseph Firschein, Assistant Director, Consumer and Community Affairs, Federal Reserve Board, Washington, D.C.

"I'll commit to take your requests back and to share your recommendations with the Board of Governors, and I'll commit to responding in writing within 30 days."

Alicia Williams, Vice President, Consumer and Community Affairs, Federal Reserve Bank, Chicago, also personally committed to convening a meeting in Des Moines by the end of the year with local-area banks and Iowa CCI members to discuss predatory payday lending and Iowa CCI's small dollar loan program, a viable alternative to payday loans first developed by the community organization in collaboration with Bankers Trust.

The small dollar loan program offers loans up to $1,500 with a 12 percent interest rate and a payback period of up to three years.

"We need good, affordable credit in our communities," Espey said.  "We want more Des Moines area banks to institute the small dollar loan program developed by Iowa CCI and Bankers Trust."

Iowa Citizens for Community Improvement is a group of everyday people who talk, act and get things done on issues that matter most. With thousands of members from all walks of life -- urban and rural, black and white, immigrants and lifelong Iowans -- CCI has been tackling tough issues and getting things done for more than 30 years.

Back To Articles