California legislature may expand lending limit

LEGISLATION: Lawmaker wants to raise payday loan limit to $500; others want restrictions
“Fast Easy Cash when you want it!” That’s the promise on the cover of an application for a “cash ’til payday” loan from DFC Global Corp. The company operates eight Money Mart stores in San Francisco, more than any other payday lender. But fast money comes at a high price —an annual percentage rate up to 459 percent. Currently, California has a $300 limit on each payday loan. But legislation pending in Sacramento would raise the maximum amount to $500. While supporters of the bill say the loans benefit working people, consumer advocates worry that borrowing at high interest rates can sink poor people further into debt. That was the concern of the San Francisco city attorney’s office, which this fall settled a suit with a payday lender accused of exceeding the legal limit.


Big banks help payday lenders offer quick cash at steep prices

BUSINESS: Wells Fargo, Credit Suisse among biggest backers of profitable low-finance firms
Even as the Occupy San Francisco encampment at the base of Market Street expressed outrage at big banks and high finance, it remained business as usual at some of the city’s less glamorous financial establishments. San Franciso-based Wells Fargo, as well as other banks, are investing big money in firms that lend money at rates they are prohibited from offering. High-interest, unsecured “payday” loans are readily available at 32 establishments along Market Street and in low-income communities around the city. The banks’ names and brands are nowhere to be seen, but they have invested hundreds of millions of dollars in businesses that charge an annual percentage rate of 400 percent or more, a practice once considered by the state of California to be “usury.”


US will recover from home loan disaster: Bank of America’s Barbara Desoer

The market slump that vaporized $6 trillion of homeowners’ equity, and left one in four owing more on their mortgage than their house was worth, will continue through 2012. But this too shall pass, said Barbara Desoer, president of Bank of America’s home loans unit, at the Commonwealth Club Thursday. “We have weathered, and we have overcome, cycles like this before,” she said. The calm atmosphere of the talk contrasted with the turmoil that has roiled housing markets in the Bay Area, and throughout California and the nation, since 2007.