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LOS ANGELES – Democratic Congresswoman Maxine Waters urged members of the African-American Credit Union Coalition to drive out predatory lenders who prey on the elderly, the disadvantaged and minorities. “The first thing we’ve got to do is run the scum out of the community,” said Waters, who is serving her sixth term in the House. “We’ve got to get rid of people who prey on poor people and the elderly.” Among those Waters singled out were payday lenders, whose interest rate if annualized would range from 390% to 840%, she said. Additional fees are also imposed if payment is not made on time, she noted. “This is just not acceptable,” she said. “We (credit unions) can do better than that. We can lend money and make money. We don’t have to lend money and gouge.” Waters also targeted check cashing services, predatory tax preparation services and rent-to-own businesses as those she said were taking advantage of “the most vulnerable people in our society.” “I believe you are part of the answer to getting rid of some of the predatory practices that are causing so much devastation and harm in our communities,” she told credit union officials. Waters’ comments came during the AACUC’s fourth annual summer conference held Aug. 9-10 at the Radisson Wilshire Plaza Hotel in Los Angeles. The 2003 meeting is slated for Detroit. Waters, a member of the House Committee on Financial Services and the ranking member of its subcommittee on financial institutions and consumer credit, has been an outspoken critic of predatory lending practices. Her district includes a large portion of south-central Los Angeles and the cities of Hawthorne, Gardena and Inglewood. Speaking to a luncheon gathering Friday (Aug. 10) of more than 100 AACUC members from around the U.S. – including chief executive officers, senior and executive vice presidents, managers and volunteers – Waters also repeated her call for the repeal of mandatory minimum sentencing laws for minor drug offenses. She noted that while a young person would face a mandatory minimum sentence of five years in federal prison for possessing a small amount of drugs, corporate executives from failed and troubled companies such as Enron and WorldCom often walk away with a slap on the wrist. Waters said people who claim to be tough on crime and who push for such things as mandatory minimum sentencing laws and “three strikes” legislation – “filling up the prisons with people who look like you and I” – turn their heads when it comes to white collar crime and crimes committed in the executive suite. “This is white collar crime of the highest order,” she said referring to Enron and WorldCom. On the day of her speech, WorldCom revealed it had uncovered another $3.8 billion in improper accounting, doubling the amount of its known accounting errors to more than $7.6 billion over the past two years. “We know what they did at WorldCom. We know what they did at Enron. They committed crimes,” Waters insisted. “We know the SEC (Securities and Exchange Commission) has not been as strong as it should be. And we know that the boys in high places are well connected. Kenneth Lay (former Enron chairman) walked in and out of the White House as if he owned it.” She also blasted corporate executives who walked off with millions in compensation packages while company employees lost not only their jobs but their entire retirement fund. WorldCom founder and former CEO Bernard Ebbers, for example, left the company in April with a severance package of $1.5 million a year for life. “We’re going to create some real jail time for the CEOs who claimed they didn’t realize what was taking place,” she promised. The bulk of Waters’ speech was devoted to predatory lending and the role that credit unions could play to prevent such practices. “I wish I could drive into any city in America and see as many credit union signs on the corner as I see payday loans,” she said to enthusiastic applause. Instead, she said sees payday loan businesses setting up shop in highly visible locations in minority communities using catchy and creative names, such as “Easy Money,” to “suck people in.” Those who “get caught” in the payday loan operation are “never going to be able to save any money to do anything,” she warned. Waters, who noted she has always belonged to a credit union, said she felt the credit union movement has yet to realize its full potential. “I believe we need a lot more of them,” she said. “I think we can create a lot more credit unions.” She urged credit union officials to look at creative ways to generate additional capital as well as develop plans for a nationwide marketing campaign to attract new members. “It is time to expand the credit union movement, to grow it and to provide the services that are desperately needed in our communities,” she said. For her part, Waters said she would continue to work in Congress “to get rid of payday loans and check cashing as we know it.” -

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