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JPMorgan Chase Vows to Fix Payday Loan Practices

February 26, 2013 by Leave a Comment

At an investor meeting on Tuesday, Mr. Dimon called the practice, which was the subject of an article in The New York Times on Sunday, “terrible.” He said JPMorgan was examining the issue and would make changes.

While JPMorgan Chase does not make the loans directly, the bank, along with other giants like Bank of America and Wells Fargo, enable the online payday lenders to deduct payments from customers’ checking accounts, even in the 15 states where the loans are banned entirely. The withdrawals sometimes continue even after customers have pleaded with the banks to prevent the lenders from tapping their accounts.

The banks are a critical link for payday lenders, which are increasingly moving online, to evade statewide caps on interest rates. The loans can carry annual interest rates above 500 percent. Without access to customers’ checking accounts, the lenders, according to state and federal authorities, would not be as easily able to make loans to residents in states where high-interest payday loans are banned.

Lawmakers have taken aim at the issue, too. In July, Senator Jeff Merkley, Democrat of Oregon, introduced a bill that would restrict the payday lenders by forcing them to follow laws in states where the borrower is located, rather than where the lender is. Another crucial aspect of the bill, which is pending in Congress, is a provision allowing borrowers to more easily stop the automatic withdrawals.

For payday loan customers, many of whom are shouldering a glut of overdue bills, the automatic withdrawals sometimes cause a wave of fees.

According to a report released this month by the Pew Charitable Trusts, an estimated 27 percent of payday loan borrowers say the loans caused them to overdraw their accounts.

In the Times article on Sunday, two JPMorgan Chase customers explained their travails in trying to persuade the bank to halt automatic withdrawals.

Ivy Brodsky, one customer in Brooklyn, was charged $1,523 in fees by Chase, after six Internet payday lenders tried to take money from her account 55 times in a single month. Ms. Brodsky thought the withdrawals would stop after she visited her Chase branch in March to close the account.

Subrina Baptiste, an educational assistant in Brooklyn, said the overdraft fees charged by Chase ate into her child-support income. Ms. Baptiste said she begged Chase to stop automatic withdrawals on loans she got in 2011.

Under New York law, the loans, which came with interest rates of more than 500 percent, are illegal.

Both Ms. Baptiste and Ms. Brodsky sued Chase in federal court in New York last year. JPMorgan Chase said in a statement on Tuesday that it was “in discussions with these customers to resolve their issues” and added that the bank apologized “to them for the problems they had.”

JPMorgan officials are “taking a thorough look at all of our policies related to these issues and plan to make meaningful changes,” the statement said.

A spokeswoman for the American Bankers Association did not have an immediate comment.

Article source: http://www.nytimes.com/2013/02/27/business/jpmorgan-chase-vows-to-fix-payday-loan-practices.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Chinese Exports Grew in December

January 10, 2013 by Leave a Comment

HONG KONG — Exports from China grew at their fastest clip in more than half a year in December, underpinning hopes that global trade may be stabilizing, and offering some good news for the Chinese economy as it struggles to regain momentum.

Trade data can be volatile and subject to seasonal factors that skew numbers from one month to the next, analysts cautioned, but last month’s 14.1 percent jump in exports from a year earlier topped expectations by a very wide margin, and was a clear positive for the Chinese economy, the world’s second-largest after the United States.

“The numbers were a very pleasant surprise,” Yao Wei, a China economist at Société Générale in Hong Kong, said after the data were released on Thursday. She added that the export performance over the past three months as a whole, while not excellent, showed that external demand was “on an upward trend.”

December’s jump in exports was the fastest expansion since May last year. Exports had edged up just 2.9 percent in November, and climbed 11.6 percent in October, according to official data.

“Put in perspective with the four previous export downturns, 2012 looks to have done quite well,” Xianfang Ren and Alistair Thornton, economists at IHS Global Insight in Beijing, wrote in a research note, referring to the country’s export performance.

Taken together with recent trade data from Taiwan and South Korea, Ms. Yao said, the December data from China showed that demand from the United States was fairly stable. Demand from beleaguered Europe, she said, was “not great, but not bad,” while demand from emerging markets — which have generally enjoyed far faster growth than developed nations in recent years — remained firm.

At the same time, however, the economic and budget travails of the United States and Europe continue to overshadow the global outlook, and are likely to curtail future growth, economists have long cautioned.

“With our projection for continued contraction in the euro zone and continued slowdown in the US economy,” the economists at IHS commented Thursday, “we believe China’s export sector will face another uphill battle this year — an even tougher one than 2012.”

Article source: http://www.nytimes.com/2013/01/11/business/global/chinese-exports-grew-in-december.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Sony Sets Profit Target Lower Than Expected

May 26, 2011 by Leave a Comment

TOKYO — Sony forecast Thursday that it would generate a lower-than-expected net profit this year as it wrestled with the aftereffects of the disastrous earthquake that struck Japan in March and a series of Internet security breaches.

Disruption to supply chains and the physical damage caused by the earthquake and tsunami have clouded Sony’s near-term prospects in its home market. The situation prompted the Japanese electronics and entertainment company Monday to announce a charge on tax credits that resulted in a $3.2 billion net loss for the business year that ended in March, its biggest deficit since 1995.

The latest travails for Sony — maker of PlayStation video games, Vaio computers and Bravia televisions — come as it struggles to regain market leads lost to Apple in portable music devices and Samsung in flat-screen televisions.

On Thursday, Sony predicted a net profit of ¥80 billion, or $978 million, for the financial year that started April 1, compared with analysts’ consensus of ¥105 billion compiled by Thomson Reuters. The company expects to make an operating profit of ¥200 billion in the year, reiterating guidance given earlier in the week, which had helped its shares rise.

But some think the company’s outlook might be too ambitious. “Looking at their forecast, it appears Sony is expecting a recovery in the latter half of the year, which is a bullish forecast,” said Koji Takeuchi, senior economist at Mizuho Research Institute, “but there’s a lot of uncertainty, and there is a risk they come in below that expectation. It is still unclear what the financial burden of the security breach will be.”

The company said that it would get some production restarted over the next two months at the most heavily damaged of its plants in northern Japan but that the disaster would continue to affect units, cutting operating profit ¥150 billion for the year.

“Although most of the ¥150 billion effect will be in electronics, there will be an impact on almost all product categories,” said Sony’s chief financial officer, Masaru Kato. “Those that are likely to be worst hit are televisions, digital cameras and devices.”

Sony said its business of liquid crystal display televisions was likely to lose money for an eighth consecutive year.

The company is also reeling from one of the biggest Internet security breaches, which caused it to close its PlayStation video game network for nearly a month after data on more than 100 million user accounts were leaked. On Tuesday, Sony said additional Web sites in four countries had been hacked. Among the break-ins, personal information for 8,500 people was leaked from its Sony Music Entertainment Web site for Greece.

Worries about both incidents have weighed on Sony shares, which have dropped by almost a quarter this year, three times the fall of the Nikkei average.

Article source: http://feeds.nytimes.com/click.phdo?i=55b4e0f481d8db16a94a7a355e8bf9d0

Filed Under: Business News Tagged With: , ,