Good work by the WSJ in a report on A4 that Rent-A-Center, which it calls a “rising power in the payday-loan industry,” put the squeeze on food banks who lobbied for caps on the rapacious interest rates the racket charges.
The paper says Rent-A-Center execs threatened to quit giving the $500,000 it has pledged to the charities unless they quit their lobbying efforts in Ohio, which yesterday passed a law limiting payday loans to 28 percent annualized interest and four loans of $500 per borrower per year.
The Journal dryly notes in the next sentence that “Rent-A-Center currently charges interest rates on one-week payday loans that are equivalent to an annual rate of as much as 782%, according to a company Web site.”
Rent-A-Center’s efforts worked. The food banks backed down.
Newsday plot thickens
The Journal scooped online yesterday (and puts on B1 today) that Cablevision will bid as much as $650 million for Newsday, raising the stakes in the battle over the paper, which Tribune Company agreed in principle to sell to Rupert Murdoch’s News Corporation last week. As Sam Zell has said, people sure want to pay him a lot of money for a piece of this dying industry.
The paper notes that Cablevision would face fewer regulatory hurdles than would Murdoch or the other bidder, New York Daily News owner Mort Zuckerman, who equaled the $580 million Rupe bid on Friday. But the WSJ says it might face problems with the company’s own shareholders.
The Times says the company “may be working with a partner” but its sources wouldn’t identify who it might be.
Thanks, but no thanks
The Los Angeles Times says a lot of banks and investors are willing to cut the terms and payments for borrowers under water on their mortgages, but our Quote of the Day shows how bad the housing bust really is—prices have fallen so far and people are in so much trouble that they just don’t care:
“We are working with borrowers to keep them in their homes, but a lot of them really don’t want to stay,” said Babette Heimbuch, chairwoman of FirstFed Financial Corp. of Los Angeles, a savings and loan operator that specialized in adjustable-rate mortgages, including many that were made without full documentation of borrowers’ incomes.
FirstFed says up to half of delinquent homeowners don’t even respond to requests to work out their notes.
Investors… are buying loans on the cheap from lenders who want them off their books. By paying less than face value for the mortgages, the new holders can modify loan terms, including shrinking the amount owed, and still make money.
With some economists projecting 2 million foreclosures this year, legislators and regulators are hoping to encourage wide use of this model. They want lenders and investors in mortgage bonds to mark down what borrowers owe and then provide them with lower-cost loans.
The Journal on C1 looks at a blown land deal by Calpers, the California pension fund, which invested a billion dollars in property and now may lose “much of its investment.” The paper notes that the deal is going bad just as two Calpers execs are jumping ship, but says the moves “don’t appear to be related.”
The venture is structured similar to dozens of deals that were popular ways for builders like Lennar to buy highly leveraged land during the boom years and reduce the risk of owning the land outright. They would buy the land with partners in off-balance-sheet entities that would borrow money while limiting the builders’ exposure to the debt. Many of these deals are unraveling.
KKR goes green, sort of
The NYT puts on C1 a PR feed that KKR is partnering with the Environmental Defense Fund to go green. It’s notable because the company owns businesses with $185 billion in revenues and more than 800,000 employees. One of the notable businesses that could use greening is TXU, the big Texas utility company that KKR agreed to buy and reduce its carbon emissions.
The story seems overplayed to us, as the Times says the deal is “aimed at creating measurement tools of environmental performance across several areas.” The Journal has better news judgment, putting it at the bottom of a C3 story (to be fair, it also looks to be a PR exclusive) on a big venture capital fund raising half a billion bucks to target “larger clean-technology companies that need bigger sums of money to get to market.”
Preying on the elderly