Wednesday was a difficult day for The American Independent News Network, which is the larger entity that operates The Iowa Independent. Our chief executive and founder announced two of our sister sites would close and their content would be moved to The American Independent.
A recently introduced bill could have far-reaching impact on the U.S. sugar industry, including American Crystal Sugar, a farmer-owned cooperative that locked out 1,300 Midwest workers on Aug. 1.
The chairman for Herman Cain’s Iowa effort says the campaign “relied more on the word of farmers than Washington regulators” in deciding to run an ad containing claims the Environmental Protection Agency says are false.
The Iowa Senate will remain under the control of a slim 26-25 Democratic majority when it reconvenes in January 2012.
Amid speculation that the Iowa legislature may move to ban payday lending (or take steps to cap interest rates in a way that would effectively ban payday lending), the industry at the heart of the controversy has stepped up efforts to promote its side of the debate, going after banks and credit unions for the overdraft fees they charge.
Those fees work out to a much higher annualized interest rate than payday loans, the industry argues, and they face significantly less government regulation.
From a press release sent January 6:
Payday advances are highly regulated
- State laws heavily regulate all aspects of payday lending, including limiting the number of loan transactions, placing caps on loan transaction amounts and the fees that can be charged. Payday loans are also subject to a number of federal laws that protect consumer credit borrowers, including full disclosure of the fees expressed both as a dollar amount and an annual percentage rate.
- Bank and credit union overdraft transactions have no such regulations.
Payday advances can be a less costly alternative to overdrawing a bank account
- Payday lenders typically charge a flat fee of $15 per $100 borrowed, or 391% if quoted as an annual percentage rate.
- FDIC reports that the average bank customer pays $27 (median overdraft fee) to cover a transaction of $36 (median transaction size), with annual percentage rates ranging from 1067% to 3520%.
A report (pdf) on banking practices prepared by the consulting firm Bretton Woods for the payday lending industry was released Friday, indicating that Iowans pay over $321 million annually in overdraft fees. That works out to more than $300 per household in the Hawkeye state, which seems high, but it is below the national average. The Bretton Woods report also claims that banks and credit unions employ strategies to maximize the overdraft fees they charge their customers by reordering debits and withdrawals.
Some quick research indicated that state governments probably don’t have the power to regulate bank overdraft fees — at least not those assessed by big, national banks — in the same ways that they can regulate payday loans, which further complicates things for the state legislature.
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