NJ Consumer Advocate Ramp Up Demand for Divestment from Payday Lender

For Immediate Release: July 22, 2015

Media Contacts: Phyllis Salowe-Kaye, Phyllis@njcitizenaction.org, 973-220-3823                            

Beverly Brown Ruggia, Beverly@njcitizenaction.org, 201-344-2954

NJ Consumer Advocates Ramp Up Demand for Divestment from Payday Lender

Advocates Attend New Jersey State Investment Council Meeting to Reiterate Demands

 (Trenton)– Today, New Jersey Citizen Action, (NJCA), the NAACP NJ Conference, New Jersey Communities United, and other state advocacy organizations held a press conference to push their demand that the  New Jersey State Investment  Council, (NJSIC) divest New Jersey pension fund money from JLL Partners and the nation’s second largest predatory payday lender, ACE Cash Express.  The consumer protection and economic justice advocates held the conference just before the regular NJSIC meeting at 10 AM, where they planned to restate demands that the council divest from the payday lending business immediately and establish a much stronger investment due diligence policy. The groups demanded divestment at a previous State Council meeting in May, but thus far divestment has not happened and there is still no word on changes to due diligence process.

“Unfortunately, the State has not yet divested from ACE and indications are that it will take a long time to do so. There is also no word on what procedures will be put in place to avoid the Division of Investments making this kind of investment in the future.  This is not good enough. We need action now,” said Beverly Brown Ruggia, Community Reinvestment Organizer for New Jersey Citizen Action. “ A $10 million judgment in August 2014 against ACE by the CFPB should have raised red flags for the Division and JLL Partners should not have appeared on a list in January 2015 to receive a new investment of $150 million of public money. We clearly must change our policies.” Brown Ruggia added.

Payday lending is illegal in New Jersey due to high annual interest rates which range from 60% to well over 1400%, which greatly exceed the state’s 30% usury cap.  12 million American borrowers get trapped in payday debt, spending more than $7 billion on payday loans each year. Payday lenders, known to target minorities, military personnel and low income consumers are still able to market to New Jersey consumers via the internet.  New Jersey taxpayers and pension holders became indirect owners of ACE through an investment with JLL Partners in 2006.

“Financial bondage directed at the poor, our returning veterans and our seniors is no less egregious and debilitating than other forms of bondage.  Whether directly or indirectly, the NJ Investment Council is financially supporting the growth of this industry, with the funds placed in their trust and we have all become culprits in a sinister tragedy,” said Bruce E Davis, Sr., Economic Development Chairman of New Jersey NAACP State Conference.

ACE Cash Express, the second largest payday lender in the country, is a particularly bad actor. In 2014, ACE Cash Express was ordered to pay $5 million fines and $5 million in refunds by the Consumer Financial Protection Bureau, (CFPB) for what Director Richard Cordray called “false threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt.”  He added that the CFPB took “action to put an end to this illegal, predatory behavior.”

Pastor DeForest B. Soaries, Jr. of First Baptist Church of Lincoln Gardens said  “what we have is a reverse Robin Hood effect- the hard-earned and well-deserved pensions of the working class and middle class are in position to be used to support the predatory lending industry. The New Jersey State Investment Council can and should do better. In circumstantial state-based fiscal matters prolonged negotiations are needed to determine how to proceed towards reasonable resolution. This case does not fit that mold. A clear and decisive ruling is needed to protect the people’s pension and avoid legal greed.”

”The Division of Investments’ is going to have to dig much deeper to be sure companies operate their businesses in accordance with New Jersey Law and that they are in good standing with their regulators,” said Brown Ruggia.

About NJCA: New Jersey Citizen Action, the state’s largest non-profit organization fighting for economic and social justice, has worked to stop predatory lending on both the state and federal level for over ten years.

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