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Hank HubbardI’m just looking at the April 29 issue and came across the cartoon about the CFPB closing down payday lenders, with the credit union also failing. That is very much what I worry about. In trying to serve the underserved in Detroit I have learned that this segment thinks about money management in an entirely different way than I do. The temptation is to assume they need financial education because they are doing it wrong. More often the truth is that they know exactly what they are doing and probably think more about money management than those of us with a little more breathing room. For the most part, they don’t think they need financial education. The other temptation is to try to protect them from predatory services like payday lenders. Well meaning people often think is the right way to protect the underserved is to put payday lenders out of business, to me that’s what your cartoon depicts. By creating the rules they hope will hurt payday lenders, they are also hurting those of us that are trying to provide an affordable alternative to the obvious demand.   I don’t think limiting courtesy pay or short term lending is the answer; payday lenders will simply find a different way to satisfy the demand – they certainly won’t walk away from the cash cow. I think we as an industry can be the answer. I think payday lenders are so successful because they don’t really have any credible affordable competition. We have a payday lender alternative that costs about one-fourth what one would pay at a payday lender, and we do very little underwriting. We have a 16% loss ratio on this product, but have priced it to be sustainable. The NCUA model would appear to also be sustainable. Charging those higher rates and fees seems scandalous to us as an industry, but by not doing it we are forcing people to go to the only other resource they have: Payday lenders. In the neighborhoods we try to serve, there are no other credit unions or banks but there are plenty of payday lenders. The demand is there – let’s try to provide an affordable alternative. Hank Hubbard CEO Communicating Arts Credit Union Detriot

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