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Copyright 2004 Sentinel Communications Co.
Orlando Sentinel (Florida)

July 30, 2004 Friday



Bravo to SunTrust Bank for its consumer-friendly decision to stop bankrolling the payday and car-title lending industry.

SunTrust, the largest bank in Central Florida, confirmed this week that it would no longer provide business loans to companies that make payday or car-title loans.

Such companies typically target consumers who are poor or otherwise desperate for cash. The sky-high interest rates and other exorbitant fees those companies often charge can trap consumers in an escalating and ruinous spiral of debt.

In recent years, Florida lawmakers have cracked down on car-title and payday lending. There are few car-title lenders operating in the state now, and limits on payday lending keep borrowers from getting in over their heads. But consumers in many other states have little or no protection from unscrupulous car-title and payday lenders.

SunTrust made its decision to cut ties with such lenders after a consumer group filed a complaint with the Federal Reserve opposing the bank's pending merger with National Financial Corp. of Memphis, Tenn. Among other complaints, Inner City Press/Fair Finance Watch said records showed SunTrust had at least 60 customers making payday or car-title loans.

Announcing its decision, SunTrust cited the "potential reputational risks and consumer harm" that could come from lending to such companies. How candid, and how refreshing.

ICP believes SunTrust's decision could persuade other banks -- especially those seeking government approval for mergers -- to follow suit. Let's hope so.

LOAD-DATE: July 30, 2004

Copyright 2004 The Commercial Appeal, Inc.
The Commercial Appeal (Memphis, TN)

July 31, 2004 Saturday Final Edition



MAYBE IT'S a sign of the changing times.

National Commerce Financial Corp. and SunTrust Banks recently decided to stop doing business with companies that provide payday or car title loans.

The move, while commendable, appears to have been done to win favor with federal regulators who will decide whether to approve a merger between NCF and SunTrust.

Whatever the motives, the decision shows why high interest loans that are frequently made to lower income borrowers deserve careful scrutiny.

Tennessee law allows companies to charge interest and fees as high as 22 percent per month on small short-term loans in which car titles are used as collateral.

However, as recent articles in The Commercial Appeal have pointed out, the car title loan industry is loosely regulated.

The newspaper's investigation showed that some borrowers have been hit with undisclosed fees that add much to their total financing costs.

In some cases, borrowers end up trapped in a cycle where they can only afford to make interest payments while their loan balances remain almost unchanged.

A protest by the Inner City Press/Community on the Move and Fair Finance Watch apparently helped NCF and SunTrust see the light.

SunTrust acknowledged potential problems with title loans in a letter to the Federal Reserve Board.

John Ehrensperger, SunTrust's corporate compliance manager, wrote that his bank recognizes "the growing public concern about the business practices of some of these companies that do not operate responsibly. After considering the potential reputational risks and consumer harm that could result from lending to such a company, STI (SunTrust) is revising its credit policy to prohibit future loans to all businesses that engage in payday or title lending."

Those words should be a wake-up call to local companies that want to deal in those types of loans. Unless they're willing to accept more regulation and greater accountability, maybe more major financial institutions will follow the lead of NCF and SunTrust.

And then car title lenders will know what it feels like to struggle to get a loan.


LOAD-DATE: August 1, 2004

Copyright 2004 Sentinel Communications Co.
Orlando Sentinel (Florida)

July 28, 2004 Wednesday


SECTION: MONEY; Pg. C1 BYLINE: Richard Burnett, Sentinel Staff Writer

  In an unprecedented move, the region's largest bank is cutting its ties to the payday-lending industry, citing consumer groups' concerns about alleged abusive practices by some lenders.

Atlanta-based SunTrust Bank confirmed Tuesday it will no longer provide business loans to companies that make payday or car-title loans -- businesses that consumer advocates say often exploit poor and financially distressed consumers.

SunTrust joins a small but growing list of U.S. banks distancing themselves from these lenders, banking experts said. If more follow, it could wipe out a substantial part of the business -- something few in the industry anticipate.

SunTrust's action comes about two months after a New York-based consumer group criticized the bank for its support of payday lenders and its alleged disparate treatment of minorities in mortgage approvals. The group, Inner City Press/Fair Finance Watch, filed a protest with the Federal Reserve, opposing SunTrust's pending merger with Memphis-based National Financial Corp.

SunTrust, the largest bank in Central Florida and third largest in Florida, recently informed regulators of its change in policy regarding the payday loan and car-title loan companies.

"After considering the potential reputational risks and consumer harm that could result from lending to such a company, [the bank] is revising its credit policies to prohibit future loans to all businesses that engage in payday or title lending," SunTrust said in a letter to the Federal Reserve earlier this month.

SunTrust spokesman Barry Koling said the portfolio of loans to payday lenders was a tiny fraction of the bank's overall business.

"It was a business line that was extremely limited," he said. "But we felt it was an issue that deserved our attention."

Consumer advocates welcomed SunTrust's action.

Inner City Press/Fair Finance Watch officials said they found records indicating the bank had at least 60 customers in the business of making payday or car-title loans.

"This certainly raises the stakes for other banks," said Matthew Lee, co-founder of the consumer group. "Obviously, it doesn't force them to change, but we hope it will help clean up the problem. It has been banking's dirty little secret for a long time."

Specifically, the SunTrust action could have an impact on the pending merger of Wachovia and SouthTrust, another transaction the group opposes for similar reasons, Lee said.

Wachovia has an unspecified portfolio of payday-lending clients, according to its merger application with the Federal Reserve. SouthTrust says it doesn't provide financing to the industry.

The banks plan to respond to the consumer group's concerns as part of the Federal Reserve's process, officials for Wachovia and SouthTrust said Tuesday.

Payday-lending officials said they were disappointed at SunTrust's action, which they attributed to the bank's financial interest in expediting its merger with National Financial.

"In a merger process, when a group protests, it can slow down the process considerably," said Billy Webster, chief executive officer of Advance America Corp., the industry's biggest player, based in Spartanburg, S.C. "It is very unfortunate that SunTrust decided to acquiesce to this pressure, but it is clear why they did."

He said there are many misconceptions about payday lending, which basically provides short-term consumer financing for many working-class Americans who might otherwise be unable to obtain it.

If other banks follow SunTrust, the payday-loan industry could suffer considerable damage and many consumers won't have access to credit, Webster said.

"No other bank I know of has done this," he said. "Unfortunately, SunTrust just got caught up in a merger issue."

LOAD-DATE: July 28, 2004

Copyright 2004 The Birmingham News, All Rights Reserved
Birmingham News (Alabama)

July 22, 2004 Thursday


BYLINE: Sherri C. Goodman

"Next stop Wachovia."

That's what Matthew Lee, executive director of New York advocacy group Inner City Press, said after Atlanta's SunTrust Banks' recent pledge to stop funding payday and title lending businesses. Inner City Press challenged SunTrust's merger with Memphis' National Commerce Financial Corp. in part because SunTrust funded high-rate lenders. SunTrust, in a letter to the Federal Reserve, said it is stopping the practice "after considering the potential reputational risks and consumer harm that could result from lending to such a company."

Inner City Press plans to file a challenge of Wachovia's acquisition of SouthTrust with regulators by Monday. It will cite similar questions about Wachovia's and SouthTrust's support of what Lee calls "fringe finance" companies, he said.

The banks said: "SouthTrust and Wachovia are committed to fair lending and fair practices, and both companies have a good track record. We will be glad to look at the concerns of Inner City Press."

LOAD-DATE: July 29, 2004

Reuters, June 21, 2004
Pawn shops set activist against SouthTrust deal

NEW YORK, June 21 (Reuters) - SouthTrust Corp. funds a string of pawn shops across the U.S. South, a community activist said on Monday, compelling his group to fight Wachovia's deal to buy the Alabama bank.

SouthTrust "funds and enables" about 12 pawn shops, like Gun Runner and Pawn in Alabama, with commercial loans, according to a release from Matthew Lee of Inner City Press/Fair Finance Watch in New York.

Wachovia Corp., the No. 4 U.S. bank, on Monday agreed to buy SouthTrust Corp. for $14.3 billion to expand in the U.S. South, including in the high-growth Texas, Florida and Georgia markets.

Wachovia also lends to pawn shops, the group said, citing Uniform Commercial Code filings for both banks.

"In the case of Wachovia, we have found them disproportionately not willing to lend as a bank at normal rates in low-income neighborhoods, but cynically lending to and profiting from extremely high rate lenders in the same neighborhoods they exclude," Lee said.

In general, pawn shops hold the belongings of a borrower, for example, a musical instrument or jewelry, as security for high-interest loans. If interest payments are not made on time by the borrower, the "pawned" item can be sold.

Lee, who said pawn shops have charged annualized interest rates as high as 300 percent, and his group will oppose Wachovia's deal to buy SouthTrust and will ask for public hearings under the Community Reinvestment Act.

"Wachovia is committed to fair lending and fair practices and we have a good track record. We will be glad to look at the concerns of Inner City Press," said Wachovia spokeswoman Mary Eshet.

A SouthTrust representative was not immediately available to comment.

Lee added that this year the Federal Reserve, a bank regulator, has begun asking banks to list loans made to pawn shops.

06/21/04 18:34 ET

Copyright 2004 The Commercial Appeal, Inc.
The Commercial Appeal (Memphis, TN)

May 19, 2004 Wednesday Final Edition



A New York community group wants the Federal Reserve Board to turn down SunTrust Banks Inc.'s proposed acquisition of National Commerce Financial Corp.

Inner City Press/Community on the Move, in a challenge filed this week under the Community Reinvestment Act, said the deal should be rejected because of lending disparities, foreseeable branch closings and service reductions, SunTrust's backing of car title loan firms and predatory finance enterprises.

ICP ask the Fed to schedule a hearing on the charges.

"They (banks) are supposed to show the benefit of the merger to the communities they serve," said Matthew Lee, executive director of the ICP, the same group that filed a protest against the Regions Financial Corp. buyout of Union Planters Corp.

Although this deal may benefit the two companies and their executives, the lending and branch-closing issues indicate consumers and the community may not benefit, Lee said.

The protest did not surprise SunTrust and NCF officials.

"We dispute any charges of discriminatory lending and look forward to responding to this challenge in the proper forum," SunTrust spokesman Barry Koling said.

"We have a strong, positive, well-documented track record of commitment to the communities we serve," Koling said. "In addition, we have an outstanding CRA rating, which I think is suggestive of this commitment."

ICP filed its challenge quickly - just more than a week after the SunTrust-NCF deal was announced - to try to make sure the Federal Reserve will raise those issues in its review of the proposed transaction, he said.

Lee said 2002 Home Mortgage Disclosure Act information shows SunTrust Bank and SunTrust Mortgage exclude and deny applications from African-Americans and Latinos in disproportionate numbers to applications from white people.

Lee is concerned about SunTrust's relationships with 73 lenders that loan people money on their autos, taking possession of the titles. "SunTrust claims to be community friendly but it funds companies that make these loans of last resort at interest rates that are 400 or 500 percent."

Kevin Reynolds, analyst for Morgan Keegan & Co. in Memphis, doubts that branch-closing and antitrust concerns will be major issues in this deal. "I fully expect this merger to close," he said.

LOAD-DATE: May 20, 2004

Copyright 2004 Sentinel Communications Co.
Orlando Sentinel (Florida)

May 18, 2004 Tuesday


SECTION: MONEY; Pg. C1BYLINE: Richard Burnett, Sentinel Staff Writer

Two activist consumer groups are trying to block SunTrust Banks Inc.'s proposed $7 billion buyout of a Tennessee-based bank, citing inadequate minority lending and a litany of other issues.

The two organizations said Monday they have filed a challenge with the Federal Reserve, opposing the merger of SunTrust and Memphis-based National Commerce Financial Corp. They accused Atlanta-based SunTrust, the biggest bank in Central Florida, of racially biased lending and of supporting car-title loan shops and other operations with the potential for predatory lending practices.

The challenge is the latest in a series mounted by Inner City Press/Community on the Move and Fair Finance Watch since the number of mergers in the banking industry began picking up again late last year. The two Washington, D.C.-based groups are familiar faces at the Fed, which historically receives complaints from consumer-advocacy organizations whenever banks try to consolidate.

"Just because bank executives have become desperate to merge doesn't mean it's good for consumers and communities, nor that regulators should approve it,'' said Matthew Lee, chief counsel for Fair Finance Watch.

The groups have asked for regulatory hearings about the proposed SunTrust acquisition. They allege that, among other things, SunTrust's lending practices show a racial disparity, favoring white borrowers over African-American and Latino borrowers by 5-to-1 ratios in some cases.

Based on federal housing figures for the Orlando area, for example, SunTrust denied Latinos' loan applications almost three times more often than it did those of white applicants, the consumer groups said.

But SunTrust challenged the accuracy of those allegations. Spokesman Barry Koling would not discuss specific figures, but he said the bank is well prepared to document its track record as an equal-opportunity lender.

"We have a strong, positive track record in regard to our commitment to minorities and investment in communities,'' he said, "and we will respond to these claims in the proper forum.''

Koling said SunTrust has a top rating in relation to the Community Reinvestment Act, the federal law that requires banks to promote development and growth in minority neighborhoods and financially underserved communities.

He also dismissed allegations that the bank is involved in abusive lending practices. "We do not engage in predatory lending or discriminatory lending or improper lending practices of any type,'' he said. "We have a positive story, and we are anxious to tell it.''

SunTrust may have its hands full in making its case, some banking experts said Monday. Fair Finance Watch and Inner City Press have established reputations for doing solid research and making effective arguments before regulators, said Kenneth H. Thomas, a banking consultant and merger expert based in Miami.

"They're very focused on representing community interests, not on political interests or raising money,'' he said. "Their comments are considered very carefully by the Federal Reserve and other regulators.''

Banks typically prepare for such challenges long before they publicly disclose a merger or purchase, said Jack Greeley, a banking lawyer and partner in the Orlando law firm of Smith MacKinnon.

"It would be unusual if you didn't have these kinds of issues raised at the time of a merger proposal,'' he said. "Banks know that when they go into these agreements.''

Such challenges by consumer groups may provoke banks into doing a better job of publicizing their community-investment work, but the mergers almost always go forward, bank analysts said.

"You might see SunTrust pick up on this and make some very public statements about their community-lending programs,'' said Jefferson L. Harralson, a research analyst for Keefe, Bruyette & Woods, a New York brokerage. "But, for the most part, these activists groups are basically howling at the moon, trying to derail the deal.''

LOAD-DATE: May 18, 2004

  * * *

The Pittsburgh City Paper of Dec. 11, 2003, says that the "novel Predatory Bender: A Story of Subprime Finance may, in fact, be the first great American lending-malfeasance novel... which simultaneously helps us understand why predatory lending goes on, and why there’s hope that it might be curbed." (Click here for that review).

Predatory Bender / Toxic Credit in the Global Inner City

ISBN 0-9740244-1-4, 456 pages, endnotes

Library of Congress Control Number: 2003111283

Price: $19.95, trade paperback, 6 x 9

Available for sale on,,, etc.  Order fastest here

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For ongoing, up-to-the-minute advocacy journalism, click here for Inner City Press, and a map

Off-site:  "New Haven Savings Bank Changes Merit Students' Attention," by Matthew Lee, Yale Daily News, October 23, 2003

Off-site and stuffy: U.S. Banker, May 2001: Federal Reserve - Big Talk, Little Action, (incl. on predatory lending)

On a lighter note, click here to view  poem (doggerel) on Citigroup, "Song of Solomon [Brothers]," on the site...

Campaign Finance Reform in The Bronx (Gotham Gazette, April 3, 2000)

Community Reinvestment Act Weakened by Gramm-Leach-Bliley Act (Shelterforce, Dec. 1999)

   Click here for news on Inner City Press / Fair Finance Watch campaigns against predators

Inner City Press -- we've written (and published) the book on fighting predatory lending

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