Whether Lazy or Agenda Driven, Reporter Gets it Wrong
Recently, the Huffington Post published a story on the question of whether the Federal Reserve should expand one of its financing facilities, TALF, to include additional auto asset-backed securities (ABS) and consumer installment loan ABS. That story included many dishonest characterizations and insinuations about the American Financial Services Association (AFSA), its members, and its political action committee (AFSAPAC).
Unbelievably, the author of the piece never contacted us-by phone, email, social media, or Purell-scented snail-mail for that matter-to get our perspective on the many tendentious claims the story and its cherrypicked sources made about our industry.
Had he done so we would have informed him that AFSA has no payday lenders among its members. In its more-than-100-year history, it never has. Yet despite this plain, easily verifiable fact he allowed an “advocate” to claim that installment lending is “payday lending by another name.”
That claim cannot – and should not – be glossed over as just one man’s opinion or explained away as mere exaggeration or embellishment. No, there are major, material differences between traditional installment loans, like those offered by our members, and payday loans. You can read about those differences here and here, resources that are necessary precisely because reporters like the one working for the HuffPo have proven uninterested or unwilling in reliably informing their readers.
That level of laziness and disinterest was reflected last week when the Huffington Post failed to follow up its reporting on a House hearing, where the role of consumer credit companies was highlighted, and where it was made clear that there is a big difference between traditional consumer lenders and other types of lenders.
Related to our PAC, we would have told the HuffPo reporter that AFSA and AFSAPAC are proud to support elected officials who favor pro-consumer lending policies, contrary to the story’s insinuation that there is something underhanded or ulterior about our government affairs work. Media critics and ordinary readers alike have increasingly come to recognize that, all too often, ideologically driven reporters who sensationalize the ordinary work of political action committees in the name of “accountability” are really just bullies, trying to discourage people whose views they disagree with from exercising their First Amendment rights and participating in the public discourse.
Here’s one of the reasons why we advocate for consumers to have access to installment loans: a significant portion of the U.S. population is either underbanked (having limited access to savings or checking accounts, and not much more) or completely unbanked. A 2017 FDIC survey estimated that 6.5 percent (more than 8 million) households lacked a bank account of any kind. More than 24 million households (about 19 percent) were underbanked. These are folks who we believe should have more economic options.
The installment loans our members offer help underbanked consumers build up a credit history that allows them to more fully participate in the American economy. For the millions of unbanked, our members offer products and services that treat them fairly and with respect. We think those are worthy values. The Huffington Post reporter and others may disagree, and they are free to voice their disagreement. But the principles of sound journalism, and simple ethics, requires that they represent our positions fairly and accurately, and that they give their readers our perspective.
Coming out of a full financial quarter where many consumers have suffered severe financial disruption, there will be massive need for small-dollar loans to help folks bridge gaps, cover unexpected costs, perhaps buy a car to look for work further from home. Most traditional banks do not provide these small-dollar loans, or if they do, they exclude borrowers with less than stellar credit. Our members have long filled this gap. During this crisis, our members have been designated by the federal government as essential businesses. They have worked with their customers in need of help by offering delayed payments, loan extensions, etc.
Also important to note, TALF is not a “bailout” as the piece erroneously claims. Bailouts let lenders off the hook for past bad business decisions. The Federal Reserve program was by contrast designed to ensure lenders can use their solidly rated loan portfolios – which remain on their books – for liquidity. This will, in turn, allow consumers to continue to be able to access credit during unprecedent government-directed shutdowns and the economic turbulence that follows.
Including this critical context would have dramatically changed the Huffington Post story. It might have even meant that there was no story at all. That may have been inconvenient to the reporter and the “advocates” whose views he presents uncritically, but it would have left readers better informed at a time when reliable information is more important than ever.
May 18th, 2020 by Dan Bucherer