Aid poor, not lenders, coalition urges banks

TAYLORSVILLE — The Coalition of Religious Communities is calling on Utah's financial institutions to stop providing business loans to payday lenders and instead find a way to offer more loans directly to the state's economically disadvantaged.

From the parking lot of a Taylorsville Zions Bank, leaders of the coalition — a Salt Lake-based group representing an array of faith organizations — called payday lenders "the ugly stepchild of the banking industry," propagated in part because of banks' failure to provide loan products to the poor.

"Payday lenders are among the most predatory industries in the nation," said Glen Brown, chairman of CORC's steering committee. "Payday lenders are the ugly stepchild of the banking industry, recipients of financial support from mainstream, respectable banks who use all the tricks of corporate law to protect themselves from outright affiliation with payday lenders."

Brown pointed to data from the Utah Department of Commerce that indicates that Zions Credit Corp., an affiliate of Zions Bank, provided a loan to Check City Partnership, which operates most of the check-cashing outlets in Salt Lake County.

"In the past, bankers and banking lobbyists have been among the most vocal opponents of capping interest rates of payday lenders," Brown said. "They have fought with us every year at the state Legislature. And now we know why they have opposed us so strongly and vocally."

Documents provided to the Deseret Morning News by CORC did not show loan amounts or for what purpose the money was used. George B. Hofmann, executive vice president at Zions Bank, said Zions records show that it provided a single "small furniture and fixture lease" to a Provo Check City, and rejects CORC's characterization that Zions is nefariously engaged.

"Zions Credit Corp. is a leasing company that provides small-ticket leases," Hofmann said. "It does not provide funding for folks who then turn around and provide loans to the economically disadvantaged."

Still, CORC volunteer researcher Keith Debos wants banks to "step up" and provide loan products and services so people can avoid check-cashing companies altogether.

"There's obviously a need for the product. There's a demand for the product," Debos said. "We don't want to make it illegal. ... These people need credit, obviously — they're showing up at payday lenders. So why (doesn't) the conventional financial industry step up and start offering a product to these people? Charge 100 percent. Certainly you can make a profit at 100 percent. But there's people being charged 500 (percent), 600 (percent), 1,000 percent a year. Unconscionable."