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MinnesotansforaFairEconomy
www.mnfaireconomy.org
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PaydayLendingReportRelease 4/17/12
Mostcustomerscantaffordtorepaythewholeloaninjustafewweeks,andifthepaydaylenderdepositstheircheck,itwillbounce,costingthecustomerevenmoreinfees.Soinsteadofincurringbounced-checkfees,thecustomer
agreestorenewtheloanandjustpaystheinterest,ortakesoutanewloantopayofftheoldone,leadingtoacycleofdebtthatcanlastformonthsorevenyears.
PredatoryPaydayLendinginMinnesotaHowU.S.BankandWellsFargoHurtConsumerswithCashFastLoans
NewYorkTimes|ChasingFees,BanksCourtLow-IncomeCustomersHuffingtonPost|WellsFargoExtendsLoanswithInterestRatesUpto274PercentStarTribune|ReportRipsBanksonPaydayLoansMPR|AdvocatesSayUSBank,WellsFargoLoansPreyonLow-incomeBorrowersMinneapolisSt.PaulBusinessJournal|MNGroupClaimsBigBanksUsingPaydayLoansTwinCitiesBusiness|U.S.Bank,WellsFargoCriticizedforHigh-APRLoansMinnesotaDaily|U.S.BancorpsMoneyTalks
ChasingFees,BanksCourtLow-IncomeCustomersJenniferSilver-GreenbergandBenProtess|NewYorkTimes|April25,2012WhenDavidWegnerwentlookingforacheckingaccountinJanuary,hewaspepperedwithoffersforlow-endfinancialproducts,includingaprepaiddebitcardwithnumerousfees,ashort-termemergencyloan
withsteepcharges,moneywireservicesandcheck-cashingoptions.
Imayaswellhavegonetoapaydaylender,saidMr.Wegner,a36-year-oldnursingassistantinMinneapolis,whoendedupchoosingalocalbranchofU.S.Bankandavoidedthepaydaylenders,pawnshopsandcheckcasherslininghisneighborhood.
Alongwithacheckingaccount,heselecteda$1,000short-termloantohelppayforhiscysticfibrosis
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medications.Theloancosthim$100infees,andthatwillescalateifitgoesunpaid.
AnincreasingnumberofthenationslargebanksU.S.Bank,RegionsFinancialandWellsFargoamongthemareaggressivelycourtinglow-incomecustomerslikeMr.Wegnerwithalternativeproductsthatcancarryhighfees.Theyarerapidlyexpandingtheseofferingspartlybecausetheproductswerelargely
untouchedbyrecentfinancialregulations,andalsotorecoupthebillionsinlostincomefromrecentlimitsondebitandcreditcardfees.
Bankssaythattheyareofferingavaluableserviceforcustomerswhomightnototherwisehaveaccesstotraditionalbankingandthattheycanoffertheseproductsatcompetitiveprices.TheConsumerFinancialProtectionBureau,anewfederalagency,saiditwasexaminingwhetherbanksranafoulofconsumerprotectionlawsinthemarketingoftheseproducts.
Inthepushforthesecustomers,banksoftenhaveanadvantageoverpaydayloancompaniesandotherstorefrontlendersbecause,eventhoughbanksareregulated,theytypicallyarenotsubjecttointerestratelimitsonpaydayloansandotheralternativeproducts.
Somefederalregulatorsandconsumeradvocatesareconcernedthatbanksmayalsobesteeringpeopleatthelowestendoftheeconomicladderintorelativelyexpensiveproductswhenlower-costoptionsexistatthebanksorelsewhere.
Itisadisquietingdevelopmentforpoorcustomers,saidMarkT.Williams,aformerFederalReserveBankexaminer.Theyaregettingpushedintohigh-feeoptions.
Welookatalternativefinancialproductsofferedbybothbanksandnonbanksthroughthesamelenswhatistheriskposedtoconsumers?saidRichardCordray,directorofthebureau.Practicesthatmakeithardforconsumerstoanticipateandavoidcostlyfeeswouldbecauseforconcern.
Analystsinthebankingindustrysaythatlendingtolow-incomecustomers,especiallythosewithtarnishedcredit,istrickyandthatbankssometimeshavetochargehigherratestooffsettheirrisk.Still,inanAprilsurveyofprepaidcards,ConsumersUnionfoundthatsomebanksprepaidcardscomewithlowerfeesthannonbankcompetitors.
Whilebankshaveofferedshort-termloansandsomecheck-cashingservicesinthepast,theyareintroducingnewproductsandexpandingsomeexistingones.Lastmonth,WellsFargointroducedareloadableprepaidcard,whileRegionsFinancialinBirmingham,Ala.,unveileditsNowBankingsuiteofproductsthatincludesbillpay,checkcashing,moneytransfersandaprepaidcard.
TheRegionspackageismeanttoattractthegrowingpay-as-you-goconsumer,saidJohnOwen,thebanksseniorexecutivevicepresidentforconsumerservices.
Thepackagesarethelatesttwistoncross-selling,inwhichlenderscompetetowinalargershareofcustomerbusinesswithdealsonchecking,savingsaccountsandmortgages.
Reachingtheso-calledunbankedorunderbankedpopulationpeoplewhousefew,ifany,bankservicescouldbelucrative,industryconsultantssaid.KimberlyGartner,vicepresidentforadvisoryservicesat
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theCenterforFinancialServicesInnovation,saidthatsuchborrowerswerea$45billionuntappedmarket.
TheFederalDepositInsuranceCorporationestimatesthataboutninemillionhouseholdsinthecountrydonothaveatraditionalbankaccount,while21million,or18percent,ofAmericansareunderbanked.
Mr.Wegner,theU.S.Bankcustomer,saidthatoncehementionedthatheneededabankaccount,anemployeestartedsellinghimprepaidcards,checkcashingandshort-termloanoptions.Mr.Wegner,whomakesabout$1,200amonth,saidthathefeltlikeasecond-tiercustomer.
ItwasclearthatIwasnotgettingthesamepitchesthatwealthyclientswould,hesaid.Sincethatinitialvisit,Mr.Wegnersaidheavoidedthebranchsohewasnotapproachedwithoffers.gothroughthedrive-throughnow,he
said.
Bankpaydayloans,whichareofferedasadvancesondirect-depositpaychecks,areaparticularlyvexingpartofthenewpitchfromlenders,consumeradvocatessaid.Theshort-term,high-feeloans,liketheoneMr.Wegnerreceived,areofferedbyahandfulofbanks,includingWellsFargo.InMay,Regions
introduceditsReadyAdvanceloanafterdeterminingthatsomeofitscustomerswereheadingto
storefrontpaydaylenders.
Theloanscangetexpensive.Whentheloancomesdue,thebankautomaticallywithdrawsfromthecustomerscheckingaccounttheamountoftheloanandtheoriginationfeetypically$10forevery$100borrowedregardlessofwhetherthereisenoughmoneyintheaccount.Thatcanleadtooverdraftandotherfeesthattranslateintoanannualinterestrateofmorethan300percent,accordingtotheCenterforResponsibleLending.
TheOfficeoftheComptrolleroftheCurrency,whichoverseesthenationslargestbanks,saidinJunethattheloansraisedoperationalandcreditrisksandsupervisoryconcerns.Lastsummer,federalbankregulatorsorderedMetaBank,whichisbasedinIowa,toreturn$4.8milliontocustomerswhotookout
high-interestloans.
Lendersarealsojoiningtheprepaidcardmarket.In2009,consumersheldabout$29billioninprepaidcards,accordingtotheMercatorAdvisoryGroup,apaymentsindustryresearchgroup.Bytheendof2013themarketisexpectedtoreach$90billion.AbiglureforbanksisthatprepaidcardsarenotrestrictedbyDodd-Frankfinancialregulationlaw.Thatexemptionmeansthatbanksareabletochargehighfeeswhenaconsumerswipesaprepaidcard.
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Thecompaniesdistributingthecardshavedrawncriticismfornotclearlydisclosingfeesthatcanincludeachargetoactivatethecard,loadmoneyonitandeventocallcustomerservice.CustomerswithaconvenientcashprepaidcardfromU.S.Bank,forexample,paya$3feetoenroll,a$3monthlymaintenancefee,$3tovisitabanktellerand$15dollarstoreplacealostcard.
CapitalOnechargesprepaidcardusers$1.95forusinganA.T.M.morethanonceamonth,whileWellsFargocharges$1tospeaktoacustomerserviceagentmorethantwiceamonth.
Somesmallerbanksevenofferprepaidcardswithcreditlines,whichcarrysteepinterestcharges.
Thisisatwo-tiered,separateandunequalsystemanditisworsening,saidSarahLudwig,alawyerwhostartedtheNeighborhoodEconomicDevelopmentAdvocacyProject.
Somelendersareevenstylingtheirofficestolooklikecheck-cashingstores.InJune,RedstoneFederalCreditUnion,thelargestcreditunioninAlabama,willopentwostoresthataredesignedtolookexactlylikecheckcashers.
Oneofthestores,inDecatur,Ala.,ispartofarun-downstripmallandincludesasignthatsaysRightChoice,MoneyServices.Anadjacentstore,notaffiliatedwithRedstone,advertisesloansforpeoplewhoneedmoneyfast.
Itlookslikeacheckcasher,butonceyougetinsideyougetthebestofbothworlds,PeterAlvarez,Redstonesemergingmarketsmanager.Thestoreswilloffertraditionalcheckingandsavingsaccountsalongsideprepaidcards,moneytransferandbillpaying.Wewantedtoattractpeoplewhowouldntnaturallycometoabank.
WellsFargoExtendsLoanswithInterestRatesUpto274Percent
BonnieKavoussi|HuffingtonPost|April17,2012
BigbanksareparticipatinginapracticecommonlyassociatedwiththeuseofbigsignstolurevulnerableAmericans.
WellsFargo,thecountry'sbiggestbankbymarketvalue,andU.S.Bank,theninthlargestbankbyassets,arehelpingbankrollthepaydaylendingindustry,accordingtoareportreleasedearlierthisweekby
MinnesotansforaFairEconomy,anadvocacyorganization.
Accordingtothereport,WellsFargoandU.S.Bankhavebothfinancedtoppaydaylendersandextendpaydayloanstotheirowncustomersatsky-highinterestrates:365percentperyearforU.S.Bankand274percentforWellsFargoon$500loans.
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Thefindingscomeasbigbanksfacegrowingscruitinyfortheirpaydaylendingactivities.RichardCordray,directoroftheConsumerFinancialProtectionBureau,saidinJanuarythatthebureauplanstolookclosely
atbigbanksthatmakepaydayloans.
Thenation'stopconsumercopislikelyzeroinginonthe
practicebecauseit'softenthemostfinanciallyvulnerableconsumersthatpaydaylendersaretargeting.AboutoneinfourbankpaydayborrowersareSocialSecurityrecipients,and,onaverage,bankpaydayborrowersareindebt175daysperyear,theCenterforResponsibleLendingfoundinareportlastyear.
SinceWellsFargoandU.S.bankarenationallychartered,theyaregettingaroundsomestatelawsthatregulatepaydaylenders,accordingtotheMinneapolisStar-Tribune.
WellsFargoandU.S.Bankalsohavefinancedsomeofthelargestpaydaylendersinthecountry.WellsFargohasfinancedAdvanceAmerica(with2,313stores),AceCashExpress(with1,200stores),CheckintoCash(with1,100stores),Check'N'Go(with1,000stores),CashAmerica(with655stores),EZCorp.(with450stores),DollarFinancial/MoneyMart(with312stores),andFirstCashFinancial/Cash&Go(with226stores),accordingtotheMinnesotareport.U.S.BankalsohasfinancedAdvanceAmerica,CashAmerica,andEZCorp.,thereportsays.
Still,WellsFargoandU.S.BanktoldtheStar-TribuneonMondaythattheydonotengageinpaydaylending.Theysaidtheirservicesarecalled"checkingaccountadvances"or"directdepositadvances."
Meanwhile,somestatesaretryingtocrackdownonpaydaylenders.SomeRhodeIslandDemocraticlawmakersarepushingtocutthemaximumannualinterestratethatpaydaylenderscanchargeto36percentfrom260percent,accordingtotheProvidenceJournal.
Throughaproposedballotinitiative,Missouri'ssecretaryofstatealsowantstocaptheannualinterestratechargedbypaydaylendersat36percent,accordingtotheKansasCityStar.Acountyjudgerecentlyruledthattheproposedballotinitiative'ssummarywas"inadequate,"butMissouri'ssecretaryofstateplanstoappealthedecision.
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ReportRipsBanksonPaydayLoans
AMinnesotagroupclaimsfourbanks,includingWellsFargoandU.S.Bank,chargeasmuchas365percentinterestonsuchloans.
JenniferBjorhous|StarTribune|April17,2012AsregulatorscrackdownonstorefrontandInternetpaydaylenders,anewreportsaysfourbigbanks--includingWellsFargoandU.S.Bank--aremajorplayersinthemultibillion-dollarfast-cashindustry,chargingvulnerablepeopleinterestratesashighas365percent.Inmanycases,thefourbankschargeevenhigherfeesandinterestratesfortheiremergencyloansthanpaydaylenders,accordingtoabriefreportreleasedMondaybyMinnesotansforaFairEconomy.ThegroupnamesWellsFargoBank,FifthThirdBank,RegionsBankandMinneapolis-basedU.S.Bank.
TheSt.Paul-basedorganizationclaimsthatWellsFargoandU.S.Bankarehidingbehindtheircharterstoavoidthesortofregulationotherpaydaylendersface.Formedlastyear,thegroupismadeupofcommunitygroups,faithgroupsandlaborgroupssuchastheServiceEmployeesInternationalUnion."Thebanksaregettingawaywithsomethingthathaddrawnlegalactiononthepaydaylendersyouseeonthestreet,"saidKevinWhelan,spokesmanforMinnesotansforaFairEconomy."Wehopetheleadershipateachinstitutionwillreconsider
thesebusinesspractices."WellsFargoandU.S.Bankrepresentativessaytheydon'tengageinpaydaylending.Theycalltheservices"checkingaccountadvances"or"directdepositadvances"andofferalistoffeaturesthatmakethemdifferentfrompaydayloans.Theadvances,forexample,areonlyavailabletopeoplewhohavecheckingaccountswiththebanksandmakeregulardirectdepositsintothem.SanFrancisco-basedWellsFargosaidanotherkeydifferenceisthat,unlikewithpaydaylenders,itdoesn't
rolloverorextendtheadvances.Instead,theamountisautomaticallyrepaidwiththecustomer'snextdirectdeposit,wheneverthatis.Neitherbankactuallycalculatesanannualpercentagerate(APR)oninterestfortheloans,sayingtheychargestraightforwardfees."It'snotappropriatetocalculateanAPRonaflatfeethatmustberepaidwiththenextdirectdeposit,"saidU.S.BankspokesmanTomJoyce.
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U.S.Bankintroducedits"checkingaccountadvance"in2006,hesaid,addingthata2012customersurveyindicated96percentofthecustomersusingitwere"satisfied"or"extremelysatisfied"withit,Joycesaid.AccordingtotheMinnesotansforaFairEconomyreport,a$500advancerepaidinthetypical10-daytermcosts$50atU.S.Bank,whichwouldbeanAPRof365percent.OveratrivalWellsFargo,whichhas
providedsuchadvancessince1994,thefeeforthesameloanis$37.50,whichamountstoanAPRof274percent."Itisanexpensiveformofcreditandit'snotintendedtosolvelong-termfinancialneeds,"saidWellsFargospokeswomanRicheleMessick.Byoneindustryestimate,paydaylendingisanearly$40billion-a-yearindustryintheUnitedStates.Paydaylendershavebeencriticizedforsettingloantermsthatkeepcash-strappedborrowersinperpetuadebt.Nearlyone-quarterofallbankadvancepaydayborrowersreceiveSocialSecurity,accordingtotheDurham,N.C.-basedCenterforResponsibleLending.Manystates,includingMinnesota,havebeencracking
downonstorefrontandclick-for-
cashInternetoperators.Banks,withtheirstateandfederalregulatorsandfederalguaranteesoncustomerdeposits,aresupposedtobedifferent.Criticssaytheyaren't.Bankadvancesarepaydayloansindisguise,theyargue,withtheirshortterms,extrahighcostsandthe
lenders'directaccesstoborrowers'accounts.Bankshavebecomemoreaggressiveinmarketingsuchproducts,saidUriahKing,vicepresidentofstatepolicyattheCenterforResponsible
Lending.BecauseWellsFargoandU.S.Bankarefederallychartered,theysaythey'renotsubjecttostatelaws,hesaid."Ithinkthat'soneoftherealtroubling[developments]inthelastcoupleofyears,"Kingsaid.
ThenewU.S.consumerwatchdog,theConsumerFinancialProtectionBureau,hastargetedillegalpracticesamongpaydaylendersasapriority.Itsinvestigationincludestheemergencydepositadvanceproductsbanksoffer.MinnesotaAttorneyGeneralLoriSwansonhassuedeightnon-bankInternetpaydaylendersinrecentyearsforchargingstrappedMinnesotansunlawfullyhighannualinterestratesofupto782percent.ThestateDepartmentofCommercehastakenonanumberofout-ofstateInternetpaydaylendingcompanies,too.
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Minnesotalawcapsthefeesthatcanbechargedonpaydayloans.Forloansupto$50,forinstance,thecapis$5.50;forloansbetween$350and$1,000,thelimitis33percentannualinterestplusa$25administrativefee.DavidWagner,a36-year-oldMinneapolismanwithcysticfibrosis,saidheusedregularpaydaylendersfor
years.Lastyear,hesaid,hewenttoU.S.Bankseekingtoopenacheckingaccountwithoverdraftprotectionandabankemployeesteeredhimtothedirectdepositadvanceprogram.Onlylaterdidherealizehowexpensiveitwas,hesaid.He'sstillusingitbecausehehopestoestablishanongoingrelationshipwithabank."Idon'thaveachoice,"saidWagner,explainingthathecannotmakeendsmeetwithhisSocialSecuritycheckandhispart-timeworkasahomehealthaide."ThepaydayloansIgethavehelpedwithmedicationandfoodforthehouse,butitdoesn'thelpmegetcaughtupcompletely,"Wagnersaid."Wealmostnevergetahead."
JenniferBjorhus612-673-4683
AdvocatesSayUSBank,WellsFargoLoansPreyonLow-IncomeBorrowers
MadelineBaran|MinnesotaPublicRadio|April17,2012
ST.PAUL,Minn.AnewreportclaimsUSBankandWellsFargoarepreyingonlow-incomecustomersbyofferingshort-termloanswithsteepfees.
ThereportbythegroupMinnesotansforaFairEconomyclaimsthefeesarethesameorworsethanchargesimposedbytraditionalpaydaylenders.MinnesotansforaFairEconomy,whichincludescommunity,faithandlaborgroups,hasaskedWellsFargoandUSBanktostopofferingtheloans.
"Thisproductisadebttrap.That'sit.It'sdesignedforprofitandweseethepainthatitoffers,"saidDarrylDahlheimer,programdirectoratLutheranSocialServiceFinancialCounseling,whosupportsthegroup'seffortstopersuadethebankstostopofferingtheloans.
TheloansareofferedtocustomersatUSBankandWellsFargowhohaveabankaccountingoodstandingandreceivepaychecks,SocialSecuritychecks,orotherincomeviadirectdeposit.Customerscanrequestupto$500inacashadvancewithoutcompletinganapplicationormeetingwithapersonalbanker.Thebanksthentaketheloanamount,plusfees,fromthenextdirectdeposit.
Thecashadvancescomewithconsiderablefees.USBankcharges$2forevery$20borrowed-a10-percentfee.WellsFargochargesslightlyless$1.50forevery$20.Customerspaythesamefeeregardlessofwhethertheypaytheloanbackinadayoramonth.USBankrequirescustomerstopaybacktheadvanceandthefeeswithin35days.
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Forexample,aUSBankcustomerwhotakesouta$100cashadvancepays$10infees.Ifthecustomerpaystheloanbackin10days,thefeesaretheequivalentofa365percentannualinterestrate,thereportsaid.
KevinWhelan,spokespersonforMinnesotansforaFairEconomy,saidhedoesnotknowofanyother
banksthatoffersimilarloans.OfficialsatTCFBankandBankofAmericatoldMPRNewstheydonotofferthistypeofloan.
WellsFargoandUSBankdeclinedtoprovideinformationabouthowmanycustomersrelyoncashadvancesandhowfrequentlycustomersusetheadvances.A2011reportbythenonpartisanresearchandpolicygroupCenterforResponsibleLendingfoundthatnearlyone-quarterofallconsumerswhousebankpaydayadvancesreceiveSocialSecurity.Italsofoundcustomerswhorelyontheloansareindebtfor175daysayearonaverage.Thegroupcompiledthestatisticsusingnationwidecheckingaccountdatafroma
privateresearchfirm.
USBankspokespersonNicoleGarrison-Sprengerdeclinedaninterview
request.Inanemail,shesaidthebank'sproduct,knownasCheckingAccountAdvance,"isasafetynetforcustomerswhohavenootherwaytopayforunexpectedexpensessuchasamedicalemergencyoranautorepair."
Thebankisupfrontaboutthecosts,shesaid,andinformscustomersoflower-costoptionsthatmightbeavailable.ItalsoprovideswhatGarrison-Sprengercalled"mandatory'coolingoff'periods"topreventcustomersfromrelyingtoofrequentlyontheshort-termloans.
Someconsumeradvocatessaythelimitsarenoteffective.USBank
allowscustomerstotakeoutcashadvancesfornineconsecutivestatementcycles.Afterthat,thebankimposesa90-day"coolingoffperiod"beforeallowingcustomerstobeginborrowingagain.
WellsFargoallowscustomerstoreceivecashadvancesforsixconsecutivestatementperiods.Afterthat,thebankreducestheamountacustomercanborrowby$100permonthuntiltheamountreacheszero.
However,thebankoffersanoptiontogetaroundtherestriction,whichitnotesonitswebsite."Youcanavoidthisreductioninyourstandardcreditlimitifyoudonottakeanewadvanceforonecompletestatementperiodatanytime,"thewebsitesays.
WellsFargospokespersonRicheleMessicksaidthebankistransparentaboutthehighfeesandintends
theloanstobeusedonlyinemergencies.ShenotesthatWellsFargoprovidesamonthlypaymentplanforsomecustomerswhocannotpaybacktheadvancewithin35days.
"Itisanexpensiveformofcreditthatisnotintendedtosolvelonger-termfinancialneeds,"Messicksaid."Andwehavepoliciesinplacetohelpensurethatourcustomersdonotusedirectdepositadvanceasalong-termsolution."
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Messicksaidthecashadvancesdifferfromtraditionalpaydayloansbecausethebankdoesnotallowcustomerstoroll-overdebtfrommonthtomonth.Customershavetopaybacktheloanandfeesbeforetheycanborrowagain.
ButDahlheimer,atLutheranSocialService,saidthedistinctionisirrelevant.
"Talkaboutsplittinglegalhairs,mygoodness,"hesaid.
Dahlheimersaidthatforlow-incomeconsumerswhoreceivefinancialcounselingatLutheranSocialService,cashadvancesareoftenthefirststeptoaruinouscycleofdebtandbankruptcy.Customersmightreceivequickcashupfront,hesaid,butwhenpartoftheirnextpaycheckorSocialSecuritycheckisusedtopaybackthatdebt,customerswilloftenhavetroublepayingthatmonth'sbills.Customerswillthenrequestanothercashadvanceforthenextpaycheck,hesaid.
Inthelongrun,whencustomershavereachedthelimitforcashadvancesorcannotpaybacktheamountowed,theyfacebouncedchecks,overdraftfees,andpoorcredit,hesaid.
"It'slikethrowinggasolineonthefireofindebtedness,"Dahlheimersaid."Peoplewhoarefairlydesperate,whohavepoorcredit,can'thaveaccesstotraditionalloans,it'slikehavingaproductouttherelikeanaccelerant,whichiswhatarsonistsuse,tomaketheproblemmuch,muchworsequicker."
Banksarenotsubjecttostatelawsthatregulatetraditionalpaydaylenders,accordingtoWellsFargoandorganizerswithMinnesotansforaFairEconomy.
Opponentsoftheloanshavecontactedfederalregulatorstoaskforabanonbankpaydayloans.LocalcommunitygroupshavealsometwithUSBanktoaskthemtostopofferingtheloans,saidWhelan,theMinnesotansforaFairEconomyspokesperson.
"WethinkthatUSBankandWellsFargo,justbecausetheycareabouttheirimageinthecommunityandwanttodotherightthing,shoulddesignproductswithfeesthatoffershort-termcreditonfairtermsandnottheseexorbitantandpredatoryterms,"Whelansaid.
MNGroupClaimsBigBanksUsingPaydayLoans
MarkReilly|MinneapolisSt.PaulBusinessJournal|April17,2012
Anadvocacygroupiscriticizingarosterofbigbanks,includingWellsFargoandU.S.Bancorp,forusing'payday'-styleloanswhileavoidingthescrutinythatthepayday-loansectorhasdrawnfromregulators.
TheStarTribunereportsonthedispute,whichalsocroppeduplastyear.Thebankssaythey'renotofferingpaydayloans,but"directdepositadvances,"whilethegroup,MinnesotansforaFairEconomy,saystheresultisthesameconsumersgettrappedunderdebtandhighinterestrates.
MinnesotahascrackeddownonInternet-basedpaydaylendersinrecentmonths.
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U.S.Bank,WellsFargoCriticizedforHigh-APRLoans
Alocaladvocacygroupreleasedareportstatingthatfourlargebanks,includingU.S.BankandWellsFargo,arechargingpeopleinterestratesashighas365percent.
NataleeyaBoss|TwinCitiesBusiness|April17,2012
St.Paul-basedadvocacygroupMinnesotansForaFairEconomyhascriticizedfourlargebanks,includingU.S.BankandWellsFargo,forchargingcustomersexorbitantratesashighas365percentonloansthatresemblepaydayloans.
InareportreleasedMonday,thegroupsaidthatwhileregulatorsareconstantlycrackingdownonsmallerpaydaylendersforchargingcustomershigherfeesandinterestratesthanallowedbyMinnesotalaw,fourlargebankschargeevenhigherratesfortheiremergencyloans.InadditiontoMinneapolis-basedU.S.BankandSanFrancisco-basedWellsFargo,whichhasamajorMinnesotapresence,thegroupalsonamed
FifthThirdBankandRegionsBankinitsreport.
Thebanksaregettingawaywithsomethingthathaddrawnlegalactiononthepaydaylendersyouseeonthestreet,KevinWhelan,spokesmanforMinnesotansforaFairEconomy,toldtheStarTribune.Wehopetheleadershipateachinstitutionwillreconsiderthesebusinesspractices.
ThegroupcalledoutU.S.Bankscheckingaccountadvanceservice,whichchargescustomers$2forevery$20borrowed,andWellsFargosdirectdepositadvancethatcharges$1.50forevery$20borrowed.Becausethetermsoftheseloansaresoshorttypically10daystheyamounttoextremelyhighannualpercentagerates(APRs):365percentatU.S.Bankand274percentatWellsFargo,accordingtothereport.
However,U.S.BankandWellsFargorepresentativestoldtheStarTribunethattheseadvancesaredifferentfrompaydayloansbecausetheyareonlyavailabletopeoplewhohavecheckingaccountswiththebanksandmakeregulardirectdepositsintothemandbecausetheadvancesareautomatically
repaidwiththecustomersnextdirectdeposit.Inaddition,bothbanksclaimthattheydontactuallycalculateanAPRoninterestfortheloansbecausetheychargestraightforwardfeesinstead.
ItsnotappropriatetocalculateanAPRonaflatfeethatmustberepaidwiththenextdirectdeposit,U.S.BankspokesmanTomJoycetoldtheMinneapolisnewspaper.
U.S.Bankreportedlyintroduceditscheckingaccountadvanceservicein2006.A2012customersurveyfoundthat96percentofthecustomersusingitweresatisfiedorextremelysatisfiedwithit,Joycesaid.
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U.S.BancorpsMoneyTalks(OPINION)
CandiceWheeler|MinnesotaDaily|April25,2012
Ivebeenscrewedoverbymybankahandfuloftimesduetoobsceneoverdraftfeesachargethatcanbeasmuchas$35eachdayitgoesunpaid.
U.S.BankandWellsFargoareofferingtheircustomerswhoreceivepaychecksviadirectdeposittheoptionofshort-termloanstoactasasafetynettocatchthosefeesbeforetheyskyrocket.Somepeoplerelyonthesetypesofloans,whichchargea10percentfee,togetthemoutoftheirfinancialbinds.
TheadvocacygroupMinnesotansforaFairEconomyiscallingthesepaycheckloansanunavoidabledebttrapforlow-incomeborrowers.ThegrouphasalsocriticizedthebanksfortheirlackofforeclosureassistanceinmainlyblackandLatinoneighborhoods.Lastyears$452millionintotalmortgagerevenuewasanall-timerecordforU.S.Bank.
Intheirfirstquarterof2012,U.S.Bankrecordedanetincomeof$1.3billion9percenthigherthan2011.Thesefiguresaredrivenbya7-percentgrowthinnetinterestincomeandan11percentgrowthinfeerevenue.
Butcashadvances,despitethehighfees,canbehelpfulwhenusedasasafetynetforfaultypendingtransactionsthatoftenleadtoanoverdraft.In2011,customerspaidapproximately$31.6billioninoverdraftfees.
U.S.Bankallowscustomerstousetheloanscontinuallyforuptoninemonths,followedby90-daybreakbeforetheycanstartupagain.
Theresnodoubttheseadvancescouldsendthosewhoarefinanciallyunstableintoahabitualcycleofdebt;anyloanorcreditcardcould.Butthereisntnecessarilyanyharminofferingtheloans.Itsessentiallythecustomersdecisionwhetherornottoutilizethefunds,anditsreassuringtohavethatemergencycashavailableatmyfingertips.
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ShareholderSpring:U.S.BankandWellsFargo
LosAngelesTimes|ProtestersDisruptWellsFargoShareholderMeetingMotherJones|WellsFargoTurnsAwayItsOwnShareholdersFromItsShareholderMeetingStarTribune|U.S.BancorpRideMortgageSurge
KSTPTV|TaxDayRallyFocusesonBanks,WealthyAmericansWCCORadio|ProtestersGatheratU.S.BankShareholdersMeetingTheUptake|U.S.BankandWellsFargoThrowFamiliesontotheStreet
[IntheprintandonlineeditionsoftheLosAngelesTimes,aphotofeaturingSEIULocal26activistGerardoCajamarcawasincluded.CajamarcawaspartofourMinnesotadelegation.Thephotoisincludedbelow.]
ProtestersDisruptWellsFargoShareholderMeeting
Despitethetumult,WellsFargosaid96%ofinvestorscastingnonbinding"sayonpay"votessupportedCEOJohnStumpf's$19.8-millioncompensationpackage.E.ScottReckard|LosAngelesTimes|April25,2012SANFRANCISCOWellsFargo&Co.ChiefExecutiveJohnStumpfgottokeephispay,butlittleelsewentthebanker'swayduringanacrimoniousannualshareholdermeeting.
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DemonstratorsswarmedtheMerchantsExchangeBuildinginSanFrancisco'sfinancialdistricttoprotestthebank'slendingandforeclosurepolicies.Someshareholderscouldn'tgetintothemeetingasthecrowd,whichpoliceestimatedexceeded1,000people,shutdownnearbystreets.
Insidethemeeting,Stumpfwasdisruptedbyprotesterswhomadeitintotheauditorium:"Thetimefortalkisover,"saidRichardSmith,anEpiscopalpriestinthelow-incomeMissionDistrictwhourgedWellsFargoexecutivestoshowcompassionforstrugglingborrowers.Despitethetumult,shareholdersvotedtoembraceStumpf'sstewardship.Thebanksaid96%ofinvestors
castingnonbinding"sayonpay"votessupportedtheCEO's$19.8-million
compensationpackage.He'searnedabout$60millionoverthelastthreeyears.That'sinsharpcontrasttoCitigroupInc.shareholders'votelastweekagainst
CEOVikramPandit's$14.9-millionpaypackagefor2011.ThedifferencebetweenCitiandWellsFargomightreflectthebanks'
comparativeperformanceduringandafterthefinancialcrisis.Citirequiredtwogovernmentbailoutstosurvive,anditsstockstilllanguishesatlessthan10%ofitspre-
crisishigh.Wellsweatheredthecrisisinfarbettershapeandhasrecoveredmorethan90%ofitspre-crisisshareprice,withitsprofitsnowapproachingrecordlevels.Demonstrators,manyfromtheOccupyWallStreetmovement,sayWellsFargo'ssuccesshascomeatitscustomers'expense.TheydemandedthatWellsFargohaltforeclosures,divestinvestmentsinprison-managementcompanies,endhigh-interestpaydaylendingandforgivedebtsofstrugglingborrowerswithunderwatermortgages.
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Eightdemonstratorswerecitedfortrespassingaftercausingdisruptionsatthemeetingorinthestreetsoutside,SanFranciscopolicesaid.Onelong-haired,beardedmanwhoidentifiedhimselfasStardustwasledtoasheriff'svanwithhishandsboundbehindhim,protesting:"Ihavealegalproxytoenterandtheyrefusedme."
Theprotestersoperatedunderthe"99%Power"banner,referringtothosenotamongAmerica'shighestincomeearners.Theyincludedlaborgroups,communityactivistsandacoalitionof30SanFranciscoreligiousleaderswholedaprayersessionwithreadingsfromtheBibleandKoran."Donotprofitbythebloodofyourfellows,"saidaTorahquotationreadbyCamilleShiraAngel,rabbiofaReformsynagogue.Protestersalsopushedamockstagecoachreading"HellsFargo"throughthestreetsandshoutedthroughaloudspeakernexttoagiant,cigar-smokinginflatablerat:"The99%havearrivedatthebuilding.The1%arenotgettingin."
Butintheendthedemonstratorscomplainedtheycouldn'tgetintothemeeting.MargueriteYoung,aserviceworkersunionorganizer,saidWellsFargohadallowedentrybyonly20or30ofmorethan200protesterswhohadboughtsharesofthebank'sstock.Wellshadpackedtheballroomwithworkersfromitsofficesearlyintheday,shesaid."Therestoftheroomabout250peoplearetheirownemployees,membersoftheboardandofficers,"shesaid.WellsspokesmanAncelMartinezsaidaccesshadbeenrestrictedasamatterofsecurity."SanFranciscoP.D.madethecallthatweneededtoshutitdown,"hesaid.
Martinezsaiditwasthefirsttimeinmemorythattherehadbeennoquestionsatanannualmeeting.Itlasted45minutes,comparedwith21/[email protected]
WellsFargoTurnsAwayItsOwnShareholdersFromItsShareholderMeeting
JoshHarkinson|MotherJones|April24,2012
"IwouldnotwanttoworkforWellsFargo,"onewomanonlunchbreakindowntownSanFranciscoloudlytoldherfriend.
Nokidding.Ataroundnoontoday,some2,000activistslaunchedablitzkriegagainstthebank'sannualshareholdermeetingattheMerchantsExchangeBuilding,wheretheyblockedentrances,inflatedatwo-storycigar-smokingratinthestreet,anddeployedhundredsofshareholderactiviststopackthejoint.
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Citingspaceconstraints,thebankturnedawaymanyoftheshareholders,amoveprotestersquicklydecriedasanillegalattempttododgetoughquestions.ApressreleasefromtheactivistgrouptheAllianceofCaliforniansforCommunityEmpowermentclaimedWellsFargopackedthemeetingwithitsownemployees,andcontinuedtoletshareholderswhowerenotpartoftheprotestinthroughasidedoor.
AWellsFargospokesmandidnotimmediatelyreturnmycall.
Inthebuildinglobby,IranintoWellsFargoshareholderAndrewConstans,whowaswearingasuitandtieandholdingapapercopyofhissingleshareofstock.The19-year-oldUniversityofMinnesotastudentflewhalfwayacrossthecountrytotellWellsFargothatitshouldpaymoretaxes.(Between2008and2010,WellsFargopaidnone,butgot$681millionintaxcredits.)"Ipaytaxes,sowhycan'tthey?"Constansasked."I'mnotamultinationalcorporation;Idon'thave60tax
shelters."
TheWellsFargoprotestispartofaneffortonthepartof99%Power,a
coalitionofdozensoflaborandcommunitygroupsthatplanstotargetsome40corporateshareholdermeetingsoverthenextsixweeks."It'sabroadergroupthannormallydoesshareholdersmeetings,"saysStephenLerner,anexecutiveboardmemberwiththeServiceEmployeesInternationalUnion."It'sacampaignthat'ssaying,let'sgatherallthefolkswhoare
impactednegativelybythesegiantcorporationsandletsfigureoutwaystoillustratethatandchallengethemdirectlyatthemeetings."
ThatstrategywasonfulldisplaytodayindowntownSanFrancisco,wheredemonstratorshitWellsFargofromeverypossibleangle.AspeakerwiththeimmigrantsrightsgroupCausaJustapointedoutthatWellsFargoisashareholderinCorrectionsCorporationofAmerica,aprivateprisonfirmthatprofitsfromdetainingillegalimmigrants.BobDonjacour,afreelancecomputerprogrammerandmemberofOccupySanFrancisco,heldasignthatsaid,"StopFundingDirtyPower,"highlightingthebank'sinvestmentsinoilandgas.Otherprotesters
criticizedWellsFargo'sinvolvementintheAmericanLegislativeExchangeCouncil,theexcessivesalaryofCEOJohnStumpf($19millionin2010),and,ofcourse,itsforeclosurepractices.
OnthecornerofPineandSansomeStreets,IranintoartistCherylMeeker,amemberofanOccupy-relatedprotestgroupknownasDon'tJustClickThere."It'saboutdoingthingsinreallife,like,physically,"sheexplained.Shewasblockingtheintersectionwithalongclothbannerwithflamesonitasothersheldupsignsreading,"HellsFargo."
"Doyouthinkwecangetthrough?"askedtwoguysinnicesuits.
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Meekerdeclined,butdidgiveeachofthemadollarbill.Itsportedanimageofhumanspullingastagecoachwiththecaption:"Debtslavery."
Accordingtopressreports,24peoplewerearrestedattheprotests,includingseveralwhodisruptedtheshareholdermeetingfromwithin.Meanwhile,WellsFargoannouncedrecordprofitsandawardedCEO
JohnStumpfa$19.8millionpaypackage.
U.S.BancorpRideMortgageSurgeRevenuegrowthattheMinneapolis-basedbankwasthestrongestintwoyears.Earningsrose28percent,butsharesroseonly1percent.JenniferBjorhous|StarTribune|April18,2012
U.S.BancorpbeatWallStreetestimatesTuesdayonstrongoverallloangrowthplusasurprisingsurgeinmortgageactivity.Althoughprofitsdroppedaskoshfromthepreviousquarter,whenthebankbenefitedfromaone-timesettlementgain,theywereup28percentfromayearearlierto$1.3billion,or67centspershare,toppingWallStreetexpectationsfor64cents.TheMinneapolis-basedbanksawrevenuejump9percentinthefirstquarteroverayearago,to$4.9billion,itsstrongestrevenuegrowthintwoyears.Theincreasereflectsa7.3percentriseinnetinterestincomeandan11.3percentjumpinnon-interestincome,mainlydrivenbystrongmortgagebanking.Thelenderalsoboostedincomebyabout$90millionbysettingasidelesstocoverbadloans.Exceptforhigher-than-expectedearnings,resultswere"rightdownthefairway,"analystsatRobertW.Baird&Co.saidinaresearchnote.U.S.BanksharesclosedTuesdayat$31.55,upabout1percent.U.S.Bankisregardedasoneofthecountry'smostprofitableandbest-runbigbanks,andalready-highinvestorexpectationslikelymutedreactiontothelender'ssolidearningsreport.Investorswerealsolikelyconcernedaboutfeeincomefromdebitandcreditcards,saidErikOja,bankingindustryanalystatS&PCapitalIQ."Ithinkthatwasmuchworsethanexpected,whichisonereasonwhythestockisn'tupthatmuchtoday,"Ojasaid.Ojasaidhewasconcernedaboutthebankbeingabletomaintainthemortgagepaceasitcashesinontheboominpeoplerefinancingtheirmortgages.The$452millionintotalmortgagerevenueisanall-timerecordforthebank,hesaid,andabouttwicewhatitusuallymakes."It'sunsustainable,butit'sreallygood,"Ojasaid.
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Inaconferencecallwithanalysts,U.S.BancorpCEORichardDavissaidthecompanyhasbeenstrategicallytakingmortgagebusinessfromsmallerbanksandlargerbanksbackingawayfromthatsector.It'samarketshareopportunity"youonlygetonceinalifetime,"hesaid.Thebank'sothersourceofrevenue,netinterestincome,sawgrowthdrivenbyinvestmentsecurities,a
changeintheclassificationofcreditcardbalancetransferfeesasinterestincomeanda6.4percentriseinaveragetotalloans,includingresidentialmortgages,commercialloans,creditcardloansandcommercialrealestateloans.Itsmortgageloanvolumegrewby20percent,anditscommercialloanvolume,whichincludesloanstosmallbusinesses,rose17percent.Thebank'screditcardbalancewasboostedbyitsacquisitionofa$700millionportfolioofcreditcardsfromBankofAmerica.Analystssaidit'sdifficulttoknowjusthow
muchofthebank'soverallloangrowthisorganic,asopposedtotakingbusinessawayfromcompetitors.DavistoldanalyststhatU.S.Bankexpectstorecoupbyyear'sendabouthalftherevenueithaslostfromvariousnewfederalregulations,suchasacaponwhatbankscancollectondebitcardswipes.Withoutelaborating,hesaidpartofthatrecoverywillcomefrom"someincreaseincertainfeecategories."
"We'regoingtobeverycareful,"hesaid.Davidalsoindicatedthebankmaymakemoreacquisitionsinotherbanks,orcorporatetrustandpaymentoperations.Thebankannouncedlastmonththatitwillraisethedividendpayoutforshareholders56percentto78centspersharefrom50centsannually.Italsosaiditwillbuyback100millionsharesofcommonstockoverthenextyear.Itrepurchased
16millionsharesinthefirstquarter.Atthebank'sannualshareholdersmeetingTuesdayindowntownMinneapolis,Davisfieldedseveralquestionsfromattendeesonforeclosures,taxesandthecriticalneedforbankstofacilitatewiretransfersofmoneytoSomalia,amajorissuefortheSomalicommunityinMinnesota.ManyofthepeopleaskingquestionswerelinkedtoaSt.Paul-basedactivistgroupcalledMinnesotansforaFairEconomy,acoalitionofcommunity,faithandlaborgroupsthatalsoorganizedaprotestoutsidethemeeting.
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OnMonday,thegroupissuedashortreportcriticaloftheexpensiveshort-term,emergencyadvancesthatbothU.S.BankandWellsFargomaketocustomerswithdirectdepositcheckingaccounts,accusingthemofmakingpaydayloansthattakeadvantageofvulnerablepeople.
JenniferBjorhus612-673-4683
TaxDayRallyFocusesonBanks,WealthyAmericansScottTheisen|KSTPTV|April17,2012SomeMinnesotansusedthistaxdeadlinedaytoprotestbanksandwealthyAmericans,whotheysaydon'tpaytheirfairshareintaxes.
ThegroupMinnesotansforaFairEconomyledarallyoutsidetheMinneapolisConventionCenter,whereU.S.Bankhelditsannualshareholdermeeting.ProtesterssaythebanksareholdingontotheirprofitstootightlyandnotdoingenoughtohelpaverageAmericans.
ProtestersGatheratU.S.BankShareholdersMeetingChrisSimon|WCCORadio|April17,2012
MINNEAPOLIS(WCCO)ProtestorsgatheredTuesdaymorningoutsidetheMinneapolisConventionCenter,whereshareholdersoftheMinneapolis-basedU.S.Bankwerescheduledtostarttheirannualmeeting.ThegroupMinnesotansForaFairEconomyisusingTaxDaytounderscorethedemandthatbigbanksdomoretohelpthe99percent.KevinWayland,withthegroup,saysanumberofAmericansareunhappywithhowrichcorporateAmericaandpoliticianshavegottenawaywithcreatingeconomicturmoil.PeoplearegoingtorallyoutsidehereoftheU.S.Bankshareholdersmeeting,andtheywillthenmarch
downtotheWellsFargoheadquartersandaskthatthebanksthatgotbillionsinbailoutsstartpayingtheirfairshareoftaxesandstoplobbyingforloopholesandtaxbreaksforCEOsandbig,bailed-outbanks,saidWayland.HesaidthegroupsdemandisthatbankslikeU.S.BankandWellsFargostoplobbyingfortheinterestsoftheso-called1percentandbegintoactonbehalfofthecommunitiesthattheyserve.
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U.S.BankandWellsFargoThrowFamiliesontotheStreetJacobWheeler|TheUptake|April17,2012
IfUSBankandWellsFargotrulycareaboutthiscommunity,whyaretheysointenttothrowfamiliesoutonthestreet,andemptytheneighborhoodsofMinneapolis,askedSEIUactivistMarkFreemanataspiritedTaxDayrallyinfrontofWellsFargosheadquarters.
Meanwhile,activistswithMinnesotansforaFairEconomy,homeownerswhohavetakentheOccupyHomespledgetostayintheirforeclosedproperties,andSomaliAmericanswhoareunabletotransfermoneytofamiliesintheirwar-tornhomeland,successfullypenetratedUSBanksshareholdersmeetingattheMinneapolisConventionCenter.TheypepperedCEORichardDaviswithdemandsthatUSBankpaymoreintaxesandnegotiatewithhomeowners
facingforeclosurewhosemortgagesareorwereatonetimecontrolledbyUSBank.
Pressureonbigbanksworking
The99%havebeenputtingpressureonUSBankandotherbigbanksformonthsnowanditsworking,saidJohnVinje,whoseBloomington,Minnesota,homeisatriskofbeingsoldthroughasheriffssale.Wewillstayinourhomeandwanttofindasolutionwiththebank.ImheretodaytoappealpersonallytotheCEOofUSBank,askinghimforhisassistanceinmakingsurethathappens.
USBankandtheirleaderswhoareheretodayhavetheabilitytorestorethelifelinetoSomalia,saidIbrahimNur,anactivistwhoworkswiththelocalSomalicommunity.Whilemembersoftheirstaffhavemetwithus,westilldonothaveasolution.Eachdaythatthiscrisiscontinues,moreandmoreofourfamiliessuffer.
MoniqueWhite,aNorthMinneapolishomeownerandsinglemotherwhofacesforeclosureeventhoughsheworkstwojobs,hasbecomeacatalystfortheOccupyHomesmovement,inMinneapolisandnationwide.Duringashareholderquestionandanswersession,WhiteaskedDavisforUSBanktorenegotiatehermortgage,whichiscurrentlyinthehandsofthelendingcompanyFreddieMac.Davisreportedlygaveheracurtresponse,butofferedtomeetwithWhiteaftertheshareholdersmeeting.Hedidso,andreportedlyofferedtohavehisVicePresidentlookfurtherintohercase.[Seephotobelow:
InterviewwithMoniqueWhitetocomelatertonight.]
WhileRichardDavisaddressedUSBankshareholdersandactivistsposedasshareholdersapproximately200demonstratorsmarchedfromtheConventionCenter,downNicoletMall,toWellsFargosheadquarters,wheretheyheldaspiritedrally,postedabillfor$21.6billionWellsFargoowesthe99%,andaskedthebanktopayitsfairshareintaxes.LeadingthemonthemarchthroughdowntownMinneapoliswerecaricaturesofRichardDavisandWellsFargoVicePresidentJonCampbell,ridingonahorse-drawncarriageandtauntingpedestriansonthestreetforpayingmoreintaxesthantheydo.
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CTULPressConference April25,2012
We,theworkerswhocleandifferentstoreslikeKmart,Sears,BestBuy,Target,andothers,contributetotheprestigeofthesestoresthroughourworkButwhathappenswithus,theworkerswhocarryoutthecleaningwork?ThestorescontractdifferentcompanieslikeDiversifiedandCarlsonamongothers,whothen
overworkandunderpaythecleaningworkers.
AlejandroQuirino,DiversifiedMaintenanceworkerStarTribune|Janitors:ContractorDidntPlaybyRulesWorkdayMinnesota|Study,LawsuitExposeExploitationFacedbyRetailCleaningWorkers
Janitors:ContractorDidntPlaybyRules
Cleanersatbig-boxstoresfilealawsuit,sayingtheirbossdidn'tpayovertime.
DeeDePass|StarTribune|April26,2012
Agrouprepresentingjanitorshiredtocleanbig-boxretailstoresintheTwinCitiesreleasedareportWednesdayallegingindustrywideabusesbytheiremployer,DiversifiedMaintenanceSystems,forfailingtopaymandatoryovertimeandthreatsoffiring.
Thenationalreport,commissionedbyCentrodeTrabajadoresUnidosenLucha(CenterforWorkersUnitedinStruggle)andtheServiceEmployeesInternationalUnion,wasunveiledonNicolletAvenuein
MinneapolisinfrontofaKmartstore.OtherretailersthatcontractwithDiversifiedMaintenanceincludeTargetandBestBuy.
StephenPhilion,St.CloudStateUniversity'sdirectoroftheFacultyResearchGrouponImmigrantWorkersinMinnesota,readpartsofthereport,whichdetailedU.S.DepartmentofLaborinvestigationsspanning10years.Italsooutlinedlawsuitsagainstcommercialcleaningfirmsthatspecializedinretailstores.
Philioncitedcasesinwhichpaychecksbounced,whereLatinojanitorswereforcedtopaymanagersa"deposit"togethiredandwhereworkersweren'tpaidovertime.
InOctober,12TwinCitiesjanitorssuedTampa-basedDiversifiedMaintenanceinU.S.DistrictCourtinMinneapolisfor
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allegedlyfailingtopayqualifyingworkersovertime,aclaimthecompanydenied.
"Wedonotagreewiththoseallegationsandwehaveevidencetothecontrary,"saidDiversifiedattorneyPhillipRussellfromthelawfirmofOgletreeDeakinsinTampa."Wearevehementlydenyingtheircaseandwewilldosoincourt."Russelltookissuewiththeplaintiffsandtheirattorneyholdingapress
conference."It'sdisappointing.It'snotaveryprofessionalwaytolitigateacase,"Russellsaid.
PlaintiffsattorneyMichaelHealytoldthecrowdofabout40thattwomoreplaintiffsjoinedthesuit,whichheseekstogetcertifiedasaclassaction.
AlongwithHealy,10DMSjanitorscameWednesdaytosharetheirstories.Flankedbyunionmembers,attorneysandimmigrantadvocates,thejanitorssaidtheywerehiredbyDMStocleanTarget,BestBuyorKmartstoresaroundtheTwinCities.Theyallegedbeingmadetoworksevendaysaweekwithnoovertimepay.
RoyceReder,whospentfiveyearscleaningthesameKmartstorewherehestood,saidaDMSmanager
recentlytoldhimhehadtoworkfour-hourshiftsforsevendaysaweekinsteadofhisusualfive-day,40-hourshift.Ifherefuses,"Iwilllosemyjob,"saidReder,whohasnotjoinedthelawsuit.
LeticiaBaeza,whojoinedthesuitinOctober,saidshewasmadetoworkseven-dayweekswithoutovertime.Sheestimatessheisdue$26,000.
DeeDePass612-673-7725
Study,LawsuitExposeExploitationFacedbyRetailCleaningWorkersWorkdayMinnesota|April26,2012MINNEAPOLIS-TheworkerswhocleanmajorretailstoreslikeKmart,TargetandBestBuyoftenfaceshockingconditionsofexploitation,includingheavyworkloads,longhoursandlostwages,accordingtoanewstudyoftheindustryandalawsuitagainstamajorcleaningcontractor.TheinformationwasreleasedWednesdaybyCTUL,CentrodeTrabajadoresUnidosenLucha/theCenterforWorkersUnitedinStruggle,acommunityorganizationthatworksforfairwagesandbetterconditionsforretailcleaningworkers,manyofwhomarerecentimmigrants.Lastfall,workersemployedbyDiversifiedMaintenanceSystems,acleaningcontractorforretailstoresincludingKmart,Target,andBestBuy,filedsuit,chargingthatthecleaningcontractorrequiredthemtoworkupto80hoursaweekwithoutovertimepay.DiversifiedMaintenancehasbeenthesubjectofatleastsixprivatelawsuitsandaninvestigationbytheU.S.DepartmentofLaboroveritsfailuretopayovertimewages.Thelawsuitcanbedownloadedatthiswebsite.
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IworkedforDiversifiedforaboutthreeyears,sevendaysaweek,eighthoursaday,MariaCruz,oneoftheworkerswhobroughtthelawsuit,saidatWednesdaysnewsconference.IwastoldbymanagementthatIhadtopunchinfivedayswithmynameandemployeenumber.FortheothertwodaysIwastoldtopunchinwiththenameandnumberofaghostemployee.Iwasthenpaid
cashforthosedays,butIwasnotpaidattheovertimerate.Overthreeyears,thatsalotofmoney,
MembersofCTULspokeoutabouttheconditionsfacingretail-cleaningworkersatanewsconferenceWednesday.
Atthesamenewsconference,CTULreleasedareportindicatinglowwagesandotherproblemspervadetheretailjanitorialindustryinMinnesotaandthroughouttheUnitedStates.Thereport,DirtyBusiness:
WorkerExploitationintheRetailJanitorialIndustrycanbefoundattheCTULwebsite.ThereportshowsthatmanyofthecleaningcontractorshiredbyretailstoresinMinnesotaandthroughouttheUnitedStatesregularlyfailedtopayovertimetojanitorswhoworkwellinexcessof40hoursaweek."ThisstudyshedslightontherealityfacedbythousandsofretailcleaningworkersaroundthecountryaswellashereintheTwinCities,citingmultipleexamplesoffederallawsuitsandUnitedStatesDepartmentofLaborinvestigationsthathavehappenedintheindustryregardingunpaidovertimewages,alltaking
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placeoverthepastdecade.ItisshockingtolearnthatsuchconditionsexistintheshadowofstoreslikeKmartandSears,saidStephenPhillon,associateprofessorofsociologyatSt.CloudStateUniversity,whoreviewedthefindings.AsasociologistwhostudiesthesocialconditionsofimmigrantlaborinMinnesota,Phillioncontinued,
thiswhitepaperstandsoutasapowerfulonepreciselybecausemethodologicallyitpullstogetherrelevantdatafromrelevantgovernmentagencies,Minnesotaretailcleaningworkerswhohavedirectlyexperiencedtheconsequencesofintensifiedandout-of-controlnationalandglobalcompetition,andevenindustryofficialsthemselves."Accordingtothereport,departmentstoresandsupermarketscontractouttheirjanitorialworkseeminglytocutcostsandavoidresponsibility.Thereisfiercecompetitionamongthejanitorialcompaniesforthesecontracts,witheachcompanytryingtounderbidtheother.Sincelaborisbyfarthelargestandmostcostlyexpenseinacleaningcontract,thecompanywiththelowestlaborcoststendstowinthecontract.Insomecases,workersbelievethejanitorialcompaniestrytominimizetheirlaborcostswithpractices
suchasnotpayingovertimeorbyrequiringemployeestogetmoreworkdoneinashorterperiodoftime.Iheldtwojobsbecauseofthelowwages.Weworkinaplacefilledwithfoodandyetwecanbarelyfeedourfamilies,saidMarioCollolyTorres,whousedtocleanasupermarketandnowworkswithCTUL."Theylookforacleaningcompanythatisgoingtogivethelowestpriceforthework.Theresultforus:lowerwagesandincreasedworkloads.Thereportarguesthatcontractorscountonthepredominantlyimmigrantworkforcenotbeingawareoftheirrightsorbeingafraidofretaliationiftheycomplain.Inonecase,aPhiladelphiacleaningcompanyevenwentsofarastoenslavetheirworkersandtothreatentheworkersandtheirfamilieswithphysicalviolenceiftheytrytoescape.
Thereportwillbedistributedtoelectedofficialsandotherdecision-makers,CTULsaid.ThelawsuitagainstDiversifiedMaintenanceSystemsiscurrentlyinthediscoveryphase,attorneyMichaelHealeysaid,andmaygototrialinabout18months.
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ISAIAHPropheticVoicesConference April26,2012
FaithbasedorganizationsISAIAH,JewishCommunityActionandtheStairstepFoundationconvenedagatheringof250faithleadersfrom150congregationsinSt.PaulonThursday,April26tolaunchastatewidePropheticVoicesCampaign"thatwillengagecongregationsandclergyto"voteonvalues."Theeffortwill
unitecongregationsunderacommonafive-pointvaluesstatementtoaddressissuesincludingvotingrightsandracialdisparitiesineducation,healthcareandjobsduringandafterthestate's2012legislativeelections.ISAIAHwillalsoworkwith15congregationsinthewesternmetrosuburbsandSt.Cloudtocontact25,000eligiblevotersinavalues-basedcivicengagementeffort.StarTribune|MinnesotaFaithLeaderstoLaunchVoterEducationCampaign
MinnesotaFaithLeaderstoLaunchVoterEducationCampaign
RoseFrench|StarTribune|April25,2012
Some250faithleadersfrom150congregationsarelaunchingastatewidevotereducationcampaignthatwillteachpeoplehowtoviewpublicleaders,candidatesandpolicy.ThefaithgroupsISAIAH,JewishCommunityActionandHisWorksUnited/StairstepFoundationwillstartthePropheticVoicescampaignonThursdayataday-longconferenceheldattheCrownePlazaHotelinSt.Paul,accordingtoareleasedstatementfromISAIAH.
EverydayIseethepainoffamilieslosingtheirhomes,theirjobs,theirhealthcare,andtheirretirementsavings,andImoutragedbytheindifferenceshownbyourgovernmentandcorporateleaders,theRev.PaulSlack,presidentofISAIAHandpastorofNewCreationChurchinMinneapolis,saidinthestatement.
Thecampaignaimstoengagecongregationsandclergyunderacommonpropheticnarrative,afive-pointvaluesstatementthatcanbeagreeduponbymostfaithtraditions.
IssuessuchastheVoterIDballotinitiativeandracialdisparitiesineducation,healthcareandjobswillbelookedatthroughafaithperspective.ThePropheticVoicescampaignwilltakeplaceincitiesincludingAlexandria,Duluth,Minneapolis/St.Pauandtheirsuburbs,Northfield,Rochester,St.Cloud,St.Joseph,andWillmar.Congregationsfrom12denominationswillparticipateincludingtheEvangelicalLutheranChurchofAmerica(ELCA),ChurchofGodinChrist,Pentecostal,RomanCatholic,UnitedChurchofChrist(UCC),Presbyterian,UnitedMethodist,Baptist,Episcopal,UnitarianUniversalist,Mennonite,andJewishcongregations."
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