Joe Baca Loves Lenders

April 10th, 2009 · 6 Comments

Earlier this year, we blogged about the WSJ piece that revealed the extent that the Congressional Hispanic Caucus was involved with subprime lenders in promoting its Hogar Program, and we followed up that post with the Great American Mortgage Scam and the Latino Community, parts I and II. Our fearless leaders have certainly maintained some cozy relationships with the lending industry. Congressman Baca, in particular, has taken some donations from an entity that was promoting a seller-financed down-payment program, which has now been outlawed.

Now Congressman Baca has introduced a bill that is considered friendly to the payday lending industry in that it will open the door for these usury charging entities to do business in states that currently make payday lending practices difficult or impossible. Baca’s proposal would also allow online lenders to charge higher fees than those in fixed locations.

Rep. Gutierrez has also been in the news for now wanting to regulate payday lenders. At one point, he was in favor of banning them altogether, but even he has been bought to a certain extent by the intense lobbying efforts of these lenders. According to the AP:

“Indeed, the payday lending industry is strenuously resisting Gutierrez’s measure, which it says would devastate its business. The measure would cap the annual interest rate for a payday loan at 391 percent, ban so-called “rollovers” — where a borrower who can’t afford to pay off the loan essentially renews it and pays large fees — and prevent lenders from suing borrowers or docking their wages to collect the debt.”

Some consumer advocates feel that Gutierrez’s plan won’t do much, as it would give federal legitimacy to the practice.

I wish that our leaders would focus more on financial education and working to create jobs that pay livable wages so that we don’t have to live paycheck to paycheck instead of providing access to our already vulnerable financial situation. The Center for Responsible Lending reports that predatory payday lending costs American families $4.2 billion annually. We know from experience that payday lending outlets tend to be in poor, minority neighborhoods.  The Center for Responsible Lending is also opposed to key provisions of HR 1214, the Payday Loan Reform Act, because:

“they do not address the fundamental problems with payday lending that trap borrowers in debt: the high cost of the short-term credit and the requirement that the borrower pay back the loan with a single paycheck. Instead, HR 1214 lets payday lenders continue to charge annual interest rates of 391 percent for a typical payday loan, and includes measures that have proven to be ineffective in numerous states in stopping the debt trap caused by the terms of payday loans.”

As long as our leaders like Joe Baca and Luis Gutierrez accept donations from this predatory industry, we can expect them to create loopholes for their lending friends. Gutierrez has accepted $4,600 from the Online Lenders Alliance, and the group has also hosted a fundraiser for Baca. We can exercise our opinion about these practices by calling Baca and Gutierrez‘s offices. If we hold them accountable and offer alternatives to fund them (i.e. through grassroots efforts), we can more reasonably expect these Congressmen to better represent our interests.

Photo Credit: Portrait Joe Baca from his website

Tags: Congressional Hispanic Caucus · Congressman Joe Baca · Economics · Rep. Luis Gutierrez

6 responses so far ↓

  • 1 WhatThe.. // Apr 10, 2009 at 11:24 am

    Giving money and power to government is like giving whiskey and car keys to teenage boys….P.J. O’Rourke

  • 2 Michaelr // Apr 10, 2009 at 11:28 am

    We shouldn’t be surprised how Joe Baca, Luis Gutierrez, and most of the Congressional Hispanic Caucus so easily prostitute themselves to these predatory corporate lending entities that prey on the Latino community. Joe Baca, Luis Gutierrez, Xavier Becerra, and Loretta Sanchez are usually at the front of the line with their hands out whenever an opportunity like this presents itself. By supporting legalized loan sharking, the so-called Working Joe Baca positions himself as one of the most shameless and brainless public servants working in the capitol, giving Michele Bachmann and Spencer Bachus a viable run for that title. Is that monthly fund raising conference call with Nancy Pelosi so terrifying that Joe Baca has too routinely put his public office up for sale? How does this self-serving mindless little man continually get elected?

  • 3 YolandaR // Apr 10, 2009 at 7:44 pm

    At least Joe Boca et al are consistent predators. Unfortunately, I cannot recall one program they refused to support because it would exploit their constituents.

  • 4 theKaiser // Apr 10, 2009 at 8:47 pm

    Obviously, analyzing the money trail may be too complicated for voters in California’s 43rd Congressional district, even though that district has one of the highest foreclosure rates in the U.S., but who would disagree that Joe Baca hasn’t a clue about public service, and remains absolutely challenged about what is public theft and what isn’t.

  • 5 reenee // Apr 10, 2009 at 9:39 pm

    Until the voters educate themselves and quit electing worms like this, nothing will change, and that’s pitiful.

  • 6 Bearguez // Apr 15, 2009 at 6:38 pm

    Does Gil Cedillo advise Joe Baca? There seems to be a revolving pattern of deceit and public theft here.

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