Date: January 28, 2016Author: Denbeaux & Denbeaux
NJ Citizens Action
Partners, which used millions of pension funds to purchase the second largest predatory payday lender, ACE Cash Express. ACE was fined $10 million in 2014 by the Consumer Financial Protection Bureau (CFPB) for its predatory lending and illegal debt collection practices.
Phyllis Salowe-Kaye, Executive Director of NJCA
“Today, we are sending a clear message to the heinous and illegal payday lending industry that they are STILL not welcome in New Jersey. We cannot and will not allow them to enrich their morally reprehensible business practices on the backs of New Jerseyans,” said Phyllis Salowe-Kaye, Executive Director of NJCA. “Chairman Tom Byrne and the entire State Investment Council did the right thing by keeping their word to divest from ACE.”
“We are pleased to have this resolved in a manner that is both in the
public interest and in the best interest of our beneficiaries,” said Tom Byrne, Chairman of the NJSIC. “We welcome public comment, and are happy when we can act upon suggestions in a manner that comports with our fiduciary obligations.”
Rev. Dr. DeForest Soaries of the First Baptist Church
The NJ NAACP, First Baptist Church of Lincoln Gardens, and the Black Issues Conference joined NJCA in applauding the Investment Council’s decision. “Predatory lending subjects borrowers to a lifetime of continual debt through exorbitant interest and fees. The fact that our state, which outlaws payday lending, used New Jersey public pension dollars to endorse a predatory lending institution was shameful,” said Rev. Dr. DeForest “Buster” Soaries of the First Baptist Church. “I could not sit idly and allow my home state to support an industry that I have fought against most of my adult life. I congratulate Chairman Tom Byrne and the New Jersey State Investment Council for doing the right thing for the great people of New Jersey.”
Payday lending is illegal in New Jersey due to high annual interest rates which can be well over 1500%, as in the case of ACE and which greatly exceed the state’s 30% usury cap. Twelve million American borrowers are lured into payday loans, spending more than $7 billion on payday loans each year. Nearly a quarter of them get trapped into an endless cycle of debt. Payday lenders, known to target minorities, military personnel and low income consumers are still able to market to New Jersey consumers via the internet.
The decision to divest from ACE in New Jersey has national implications, as advocates and prominent elected officials in other states are pushing for divestment, including Congresswoman Maxine Waters (D-CA) who has called on prominent endowments and retirement funds to divest from payday lenders
Charles Lowery, Interim Senior Director of the National NAACP Economic Department
The divestment in New Jersey is also a victory for national organizations seeking a strong payday lending rule from the Consumer Financial Protection Bureau. “The decision of the New Jersey Pension Fund, it directors and its leadership, to fully divest its monies from ACE Cash Express sends a strong and powerful signal to the payday industry that it can no longer use the hard-earned savings and pension monies of New Jersey workers to cover up its predatory lending practices in the African-American community and communities of color,” stated Charles Lowery, Interim Senior Director of the National NAACP Economic Department.
“We are particularly grateful for the leadership of New Jersey NAACP State Conference President Richard Smith and New Jersey NAACP State Economic Chairman Bruce Davis for the commitment and support that they provided as allies throughout this successful campaign, which can now serve as a roadmap for coalitions across the country to help rid of the payday loan industry from pension and other funds.”
Bruce Davis, Economic Development Chair, NJ NAACP
Despite today’s victory for New Jersey pension holders, the divestment campaign organizers will continue to pressure the Council to make sure that investments are made in compliance with state law. “Unfortunately, our publicly trusted funds were used to grow an industry that is illegal in New Jersey,” said Bruce Davis, Economic Development Chair, NJ NAACP. “We cannot as good people leave the investment of public funds solely to those whose only purpose is to maximize the return on investment at the exclusion of what is right and just. We must remain diligent so that no public agency that represents the people of New Jersey should ever again so callously ignore the moral conscious of the same.”
“We urge the Council to take the next appropriate step of strengthening its due diligence policy to make sure a situation like this does not happen again,” said Beverly Brown Ruggia, CRA Organizer for NJCA. “The policy should be reformed to ensure that a company is in good standing with its regulators, and that funds are not invested in any company conducting business which is illegal in the state. These reforms will maximize the integrity of the pension fund and prevent the state from investing in immoral and illegal businesses.”
New Jersey Citizen Action is a statewide progressive advocacy fighting for social and economic justice. We put progressive values into action.
Contact: Phyllis Salowe-Kaye | [email protected] | (973) 220-3823
Veronica Lavarro | [email protected] | (201) 988-5260