Firstly, we want to share our commitment to equitable, anti-racist response to COVID-19, and predatory lending in Minnesota.
As we shared with you back in May, Exodus Lending is currently working through a multi-phase COVID-19 response effort to provide direct relief to participants thanks to a generous donation. As part of the first phase of our strategy, we offered to cover up to three months of payments for all current participants who opted-in.
Through July, Exodus Lending has covered $22,748 for more than 150 participants. By doing so, we lessened each participant’s debt burden, increased their disposable income, and reported these payments to the credit bureaus to improve their credit scores.
There is still much work to do. As the pandemic continues, here are some of our next steps at Exodus Lending:
Our executive director recently read “How to be An Antiracist” by Ibram X. Kendi. As a result, we were reminded of how we, along with others, must ensure what we do is anti-racist.
As the Center for Responsible Lending (CRL)’s decades of research makes clear: payday loans exacerbate economic inequality. CRL research shows that high-cost lending storefronts are disproportionately located in Black and Latino communities, even when those communities have the same or higher incomes than white communities. Of course, in many ways, racist policies created the segregated and underinvested communities in which payday lenders operate. Policies and practices like redlining and banking deregulation set the boundaries of (and restricted the availability of resources within) these neighborhoods. This is because as mainstream institutions who made their money by serving middle- to high-income earners fled low-income communities, payday lenders who profit by exploiting the needs of low-income earners flooded them. Diane Standaert summarized it best, “Payday and car title lenders are profiteers of this history of racial discrimination.”
An inclusive interest rate cap of 36% is anti-racist because it virtually eliminates this predatory industry. Such a cap would extend the regulations mandated for all active-duty military to protect all consumers and set the standard of fair credit that must be made accessible to all. Passing an interest rate cap is an essential part of ongoing efforts to right some of this nation’s wrongs. Doing so would instead advance equitable systems that intentionally serve the needs of all, especially those historically left behind.
In case you missed it, here are some of the latest news items on predatory lending:
Exodus Lending E-Newsletter: July 2020