The El Paso Times.com ran a feature on how the poor are charged more to borrow money from payday lenders, citing a loophole in Texas law. By registering as "credit service organizations," the lenders evade Texas' small-loan law, enabling them to charge rates 20 times as costly as a high-interest credit card. Those rates, when annualized, are between 300%-1100%. State Sen. Eliot Shapleigh filed a bill to limit payday interest rates to 36% annually. The story noted that West Texas CU offers a low-fee payday loan for $10 for a $500, two-week loan. CEO, Rufino Carbajal, acknowledged the program isn't a big moneymaker. Of 201 loans totaling $77,515 in the first quarter, the CU barely broke even. "There's quite a bit of losses in that program," he said. "But the key was to be able to get some people into the main credit and savings accounts."
The Oakland Business review of Michigan showcased the Michigan Catholic Credit Union in Troy for its accelerated small business lending program, which, thanks to CU partnerships formed in Warren, Livonia, Lansing, Grand Rapids, Port Huron, Saginaw, and Monroe enable it to lend up to $350,000 in SBLs. Michigan Catholic, with assets of $200 million has 32,000 members. It is also expanding the number of branches, having added four in the last four years, said CEO Daniel R. Moss.
