I am pleased to announce that,
as a result of the work of volunteer attorneys at three major law firms,
low-income Kansas Citians now have an alternative to Pay Day loans.
For many years Pay Day loans
have been the scourge of low income neighborhoods. The average interest
rate on these short term loans is 450% APR. Although the default rate on
these loans is about 6% and they are obscenely profitable, traditional major
banks have, to date, not offered competitive alternatives and efforts to find a
legislative solution to the problem in Missouri
About two years ago, CCO, a
local community organizing group, started working to create a competitive
alternative to Pay Day loans. Legal Aid joined the effort about 18 months
ago. Our Volunteer Attorney Project has recruited talented volunteer
attorneys including Adam LaBoda from Spencer Fane Britt & Browne, Kyle McCurry from Stinson
Morrison Hecker and Tom Schenkelberg of Polsinelli Shughart to work on
the project. Kyle initially provided pro bono representation in support
of the project generally and subsequently represented Central Bank, which will
actually be making the loans.
Other partners in the project
include the FDIC, Commerce Bank, United
Way
As a result of the attorneys'
work, a new not-for-profit-- Fair Community Corporation-- has been formed,
complex banking regulations have been navigated, funds raised and FCC is now
taking applications for loans. The loans will be at 36% APR and will come
with the opportunity for financial education to allow the borrowers to gain
access to even lower interest loans. A set of referring agencies will be
referring qualified, low-income borrowers to the project for loans. For
now at least, borrowers will have to go through a referring agency.
If the project is as successful,
as we think it will be, it is likely to be a powerful tool in driving Pay Day
lenders out of Kansas City
The project is also an excellent demonstration of what talented
pro bono attorneys working through VAP can accomplish. We are
tremendously grateful for the excellent work that Adam, Kyle and Tom have done
on this project.
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