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Tuesday, October 2, 2012

Strange Wind Blew Into City Council Tonight

Full Moon
Full Moon (Photo credit: Proggie)
Can't tell if it was a full moon or what but something strange happened in City Council tonight.

Three of the council members who co-sponsored an agenda item with me to put a moratorium in place so the City can examine whether or not it is a good thing to allow the proliferation of predatory lending businesses  in the City - suddenly backed out and instead voted to allow three of these businesses in the "pipeline" to go forward.

Not sure how they could go from telling the public they supported making sure neighborhoods didn't have this type of business -- which preys upon low income people -- to then flip and vote to allow three of businesses to go forward.

Quite sad if you ask me. One councilmember expressed his deep concern that the business  (a company that by the way is based in Las Vegas, Nevada and picked Long Beach to set up several shops because...well, let's say it is not because of the beach) may have already spent money on the promise it could open in the City.

Never mind the fact that the City doesn't allow this type of business to operate currently and that zoning has to be changed -- and has not been changed yet -- and that they spent money knowing full well they might not be approved.

Where was the concern for the "real" residents who came before the City Council and begged it to put a moratorium on all predatory lenders so that the City can carefully craft legislation on the issue and so they can make sure their neighborhoods aren't once again dumping grounds for businesses that bring an area down and not build it up?

Another company wanting to open two locations is incorporated in Georgia. No website to look at. They just were licensed in California at the end of March 2012 to be able to do the lending.

Took a look on the internet and found page after page of "car title lenders" in Long Beach. Huh? Thought we didn't allow them here yet.

Let me tell you what they do. They loan you money by taking the title to your car. Here is the language off one of their websites on how much they charge:

Actual loan terms (including maximum loan amount) vary based on state of residence and amount of vehicle equity. Not all applicants will qualify. Lender requires certain supporting documentation with each application. Lender will base actual loan amount on the equity of the vehicle as stated by most recent copy of the Kelley Blue Book and the lender's underwriting criteria, which includes credit report, credit score, outstanding debt and ability to repay the loan. Kelley Blue Book is a registered trademark of Kelley Blue Book Co. See Fee Schedule and loan amounts by state.
The 70% savings is solely based on an APR comparison of a $1,500 Auto Equity Loan outstanding for a 12-month term which results in a 97.5% APR to a typical $1,500 Auto Title Loan outstanding for a 1-month term which results in a 325.0% APR. This analysis is solely comparing APRs for each loan and does not reflect any actual savings of finance charges for an Auto Equity Loan.
Check out the interest rates and then tell me -- do you think the City Council should allow these lenders to grow in Long Beach?

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