By Brenda Flanagan
Payday lenders make short-term loans of last resort — often vilified by consumer and civil rights advocates and recently by President Obama — for charging extreme interest rates, some over 1,000 percent.
“Some of the worst abusers, like payday lenders, are exploiting loopholes to trap our troops in a vicious cycle of crushing debt,” Obama said.
In fact, New Jersey outlawed payday loans. So activists were outraged to discover New Jersey’s Investment Council sank $50 million into JLL Partners — a hedge fund that turned around and with New Jersey taxpayers’ money bought notorious payday lender ACE Cash Express.
“And what is even more egregious is that ACE Cash Express was fined by the Consumer Fraud Protection Bureau for pushing payday borrowers into a cycle of debt through illegal debt collection practices,” said First Baptist Church of Lincoln Gardens Rev. Errol Cooper.
“We are asking for a complete divestment to eliminate this issue. If the state does not divest their funds — which eventually end up in the hands of ACE Cash Express — what they will be doing is endorsing the quicksand payday loan industry,” said First Baptist Church of Lincoln Gardens Rev. Keenan Thomas.
A coalition of clergy and activists today repeated demands that the council dump its payday loan investment and the council apparently agrees. It’s all about timing.
“We came here in May. This is July. I know you said there was a lot to do and it was complicated,” said New Jersey Citizen Action Executive Director Phyllis Salowe-Kaye.
“We do consider it to be a problem we want to resolve, but we’re not in a position to quickly pull the trigger on a solution right now,” said NJ State Investment Council Vice-Chairman Adam Liebtag.
“All members of the council are committed to dealing with this situation. Nobody’s happy with it. I want to make that clear,” said NJ State Investment Council Chairman Brendan “Tom” Byrne Jr.
Also of deep concern today, a report that New Jersey’s public pension fund lost value last year. Assets dropped from $81 billion to an estimated $78 billion.
“Because the outflows, the pension payments vastly exceed the contributions from the state even when you include what local governments are putting in. It was, I think sobering is a fair word. It’s not a bad report by any stretch of the imagination. We still produced decent returns,” said Byrne.
Pension watchdogs remain worried about hedge fund investments and high fees paid to brokers. The council again got several requests for it to conduct a forensic audit and cost-benefit analysis.
“I do know we need to have some kind of understanding. Are we truly getting what we’re paying for?,” said Public Employees Retirement System Chairman Tom Bruno.
The Council said it’d look into making reports more clear, but did not commit to a forensic audit or a cost/benefit analysis. Efforts to divest the the payday fund are ongoing.