|Clips from the ICP / Fair Finance Watch campaign, Summer 2004 - more
2004 Sentinel Communications Co.
Orlando Sentinel (Florida)
July 30, 2004 Friday
SECTION: EDITORIAL; Pg. A18
HEADLINE: SAYING NO TO EXPLOITATION
OUR POSITION: SUNTRUST WAS RIGHT TO END BUSINESS WITH PAYDAY AND CAR-TITLE LENDERS.
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
Announcing its decision, SunTrust cited the "potential reputational risks and
consumer harm" that could come from lending to such companies. How candid, and how
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
HEADLINE: TITLE LOANS CONCERN BANKS
SECTION: VIEWPOINT; Pg. B8
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
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
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
HEADLINE: BANK SHUNS PAYDAY LENDERS
SUNTRUST HALTS LOANS TO FAST-CASH INDUSTRY
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
"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
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
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
"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
HEADLINE: GROUP CHALLENGES PAYDAY LOANS
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
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
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,"
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
"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
HEADLINE: N.Y. GROUP URGES FED TO REJECT SUNTRUST ACQUISITION OF NCF
SECTION: BUSINESS; Pg. C6 BYLINE: David Flaum
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
HEADLINE: CONSUMER GROUPS MOVE TO BLOCK BANK'S PURCHASE BY SUNTRUST -- BANK'S RECORD ON
LENDING PRACTICES IS CALLED INTO QUESTION
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
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
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
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
"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
* * *
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Predatory Bender / Toxic Credit in the Global Inner City
ISBN 0-9740244-1-4, 456 pages, endnotes
Library of Congress Control Number: 2003111283
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Available for sale on AtlasBooks.com,
InnerCityPress.org, etc. Order fastest here
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