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April 25, 2016 08:07 AM UTC

How to protect Colorado's "non-prime population" from being exploited as a "market opportunity?"

  • 9 Comments
  • by: Jason Salzman

(Promoted by Colorado Pols)

Reporters have done a good job informing us that most people who sign up for predatory loans are struggling.

But there’s a media gap in pointing out just how important the “struggling” part is to the business model of OneMain Holdings, the company backing legislation that would allow it to charge 36 percent interest on more and larger loans.

In a presentation a couple months ago, OneMain boasted to investers about its “Market Opportunity” in the personal loan business.

After noting that “Americans have $3.3 trillion in consumer debt,” and then identifying its “target market” as the 100 million Americans with low credit scores, the company pointed out where its pay dirt lies:

OneMain Holdings: “Large non-prime population with limited liquidity–63 percent of American households do not have at least $1,000 in savings, more than 40% have no emergency savings.” [Emphasis added by OneMain Holdings, not by the BigMedia Blog.]

“Non-prime population?” That’s an unfortunate phrase for this company to use, but it spotlights the point.

A lot of poeple are struggling with debt problems, and they need loans. But they obviously need protection from a big company that targets them as a “market opportunity.” How much protection from interest-rate hammering is appropriate?

We’re never going to know exactly how much money OneMain Holdings is really making in Colorado.

We’re just going to get shards of information, like the company representative confirming 30 percent growth in Colorado during the last four years.

Or the Colorado attorney general’s office confirming again that access to personal loans is not a problem here. Which indicates that OneMain is happily doing business in the state.

Objectively, it looks like the company is doing very well, thank you very much.

Except, OneMain claims that it’s not doing well enough, and one key supporter has said, if nothing is done, the company might have to walk away from Colorado!

So if you’re a state legislator, and you know OneMain will never open up its books for review (and you know that people need loans), do you err on the side of protecting those people with little or no personal savings? Or do you respond to the company’s complaints and help it out, to the tune of $9.5 million?

That’s the key question that reporters should zero in on. How much evidence is there that this company actually factually needs to make more money on the backs of Colorado’s “non-prime population?” In fact, is there any evidence at all, except what the company says?

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9 thoughts on “How to protect Colorado’s “non-prime population” from being exploited as a “market opportunity?””

  1. Excellent reporting, Jason. I am not sure the English lexicon contains sufficient adjectives to describe these companies, but we can start with "blood sucking leeches". they are akin to the companies that are running the probation operations in many jurisdictions down south in particular.
    These people are disaster capitalists…and they create the disaster by exploiting struggling families and dispossessed people….a pox on them.

    Private Probation Services Penalize the Poor, New Report Says …

     

    Penniless and desperate in January 2012, Clifford Hayes went looking for a bed in a homeless shelter. Instead, he found one in jail.

    His arrest did not occur because he committed a new crime. It was the result of an old warrant arising from a DUI and driving-without-a-license conviction in 2007, issued after Hayes failed to keep up with payments to a private probation company assigned to monitor his case. When Hayes, unemployed and surviving off $700 a month in disability payments, fell behind, the company asked the court to put out a warrant for his arrest.

    It's an increasingly common situation, with more than 1,000 court systems across at least 10 states now using private probation services, according to a critical new report by Human Rights Watch.

    "Probation is supposed to be a way to keep people out of jail, a way for courts to subject people to monitoring and oversight instead of locking them up," said Chris Albin-Lackey, Human Rights Watch senior researcher on business and human rights and author of the report. "What we see in the context of private probation is the whole thing being turned on its head.  

    http://www.nbcnews.com/news/investigations/private-probation-services-penalize-poor-new-report-says-n22411

    1. "Disaster capitalists"? …

      How's OneMain supposed to keep keepin' 'em down if our legislators don't keep makin' it easier to keep keepin' em down???

    2. Thanks, Duke. It's hard for a giant financial company to speak to investors and real people at the same time without offending one or the other.

  2. Perhaps reporters should also report that this OneMain Holdings, formerly Springleaf Holdings is the monopoly lender in this market after Springleaf (formerly American General, an AIG company) purchased OneMain (formerly CitiFinancial, a Citigroup company) in 2015 …

    … and that both AIG and Citi and their red-headed step children by whatever names they're using — all owe, in large part, the fact if their very existence today to those Great Recession (which they, btw, helped engineer) taxpayer bailouts!

     

    1. AIG and Citi 

      How could it not wind up here…? Well, actually, they probably ("they" being Big Banks and Big Insurance companies) all have a finger in that pie…or a similarly scurrilous one. You know…profit make you do 'bout anything…

      1. You had it more right at "Disaster capitalists" than you realized … as capitalists, they're a hulking disaster ("bail us out, you have to"!) — and, there's no disaster, even those they abet, that they won't capitalize on!!!

    2. So when I read this in the linked Herald article:

      The issue is that small-loan lenders are shrinking in Colorado, down to only one, Springleaf Finance, Inc. For many low-income families, a small loan is their best option, as larger banks won’t provide assistance.

      […]

      “I’m running this for progressive reasons,” Melton said. “If we don’t do something about this now, then we’re going to lose that last company, which means the only option we’ll have left is payday lenders.

      Aside from vomiting in my own mouth a little at that "progressive reasons" bit, I felt like I should maybe wonder why Rep. Melton is concerned about losing "that last company" when the only reason we lost "that other company" is that the remaining one bought it out.  I'm also curious, because in order to make the merger work, Springleaf entered into a consent decree with the DoJ's Antitrust Division to divest its Colorado offices for acquisition by Lendmark.  Did that fall through for some reason?  It was scheduled to happen this spring.

      1. I guess one man's "shrinkage" is another man's "conquering, devouring, bloated monster" (have fun with those metaphors …) …

        As far as I understand there is a small, token divestiture of an insignificant number of locations (a small handful in Colorado), probably mostly so that the DOJ could have cover from signing off on a 100% merger monopoly (… Hey, 94.7%, we did a good job protecting America here, huh?!?)!

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