Mr. Speaker, I was happy when I learned I could enter into the debate on Bill C-26, the Criminal Code amendments regarding payday loans. From experience, the payday loan industry is like a scourge on the inner city of Winnipeg, on the riding I represent. I cannot find the words to speak strongly enough about how critical I am of this exploitative criminal industry. I can say the word “criminal” I think without insulting anyone or without pushing things over the line.
This very bill has been put in effect because the government knows full well what has happened, up until the implementation of the bill, meets the definition of criminal in terms of these so-called payday loans.
In the past in other speeches I have shared the unfortunate and harsh reality that my riding is the poorest riding in Canada. Whether it is measured by average family income or incidence of poverty, Winnipeg Centre is the poorest riding in the country. I bet dollars to doughnuts it has the highest concentration of these exploitative payday loan outfits because they prey on the misery of the poor. They exist solely to take advantage of low income people, desperate people. These people go from the day's drudgery to the evening's despair. They cannot make the end of the week on their meagre earnings, whether it is their paycheque or their social assistance cheque. Because of that, they wind up the victims of these payday loan outfits.
My colleague from London—Fanshawe has raised the point with us as well that every street corner we look at has a payday loan outfit. Every little strip mall that has a vacancy in our ridings is occupied immediately by another one of these payday loan outfits, be it Paymax, The Cash Store or Money Mart. All these reputable sounding names disguise the fact that they rip people off in epic proportions and in complete violation of section 347 of the Criminal Code. For the benefit of Canadians, this section states very clearly that to charge interest at a rate greater than 60% per annum is not allowed.
That provision was put there for a reason. Some of us would argue that 60% per annum is too much, that there is no justification for charging this kind of interest rate. I think the interest rate charged on my Visa is criminal, but it is legal. Visa, at 18%, may make us angry, but these guys, who set up shop to deliberately undermine the law by charging rates of interest that are easily within the realm of criminality, should be condemned, not accommodated by the bill. I call them bloodsuckers and leaches. I call them a scourge on the inner city of Winnipeg for cheating and deliberately exploiting poor people by design.
Let us look at who is doing this and how much money they are making. Where else can people get 1,000% return on their investment? A person would be pretty happy in today's stock market to be making 8%, 10% or 12% interest. In the good old days some IPO in the high tech sector could make 20% per annum interest.
These outfits are making 1,000%, 2,000%, 5,000%, 10,000% interest per annum. One example, investigated by the attorney general of Manitoba, found one cash store was making 10,000% interest, if all the surcharges and service charges are called part of the interest. For the purposes of the law, all those charges end up with net effect of interest at 10,000%.
The industry is completely unregulated. No wonder it attracts people such as the mob, the Hell's Angels and terrorist groups. Where else can they get that kind of money?
These innocuous looking, nice, clean little stores, which are popping up in every strip mall across the country, are not only sucking the lifeblood out of my inner city riding of Winnipeg Centre, but they are starving people and they are involved in clearly illegal activity. They are not only charging usurious illegal rates of interest, but charging people to cash government cheques.
Many members in the House would be shocked to learn that no one is allowed to charge for cashing a government cheque. People do not know their banking rights and that is where the blame has to come down.
We would not be having this debate today or the epidemic of rip-offs going on in our ridings if the banks were doing their job of providing basic financial services to Canadians as per their charters. If the banks had not abandoned the inner cities of Winnipeg, Vancouver, Toronto, Sault Ste. Marie and London, if they had not bailed out on this nuisance financial services industry that they do not want any more, poor people would not need to go to these rip-off outfits.
Fifteen branches of the five charter banks in my riding have left since I have been a member of Parliament. I know that 13 or 14 have left the riding of Winnipeg North, represented by my NDP colleague who is not here today. That is almost 30 branches of inner city ridings.
I am sorry, I will not point out whether my colleague is here or not today. I am actually delivering this speech on behalf of my colleague, the finance critic for the NDP, so people can draw their own conclusions as to whether she is here or not.
The fact is that roughly 30 branches of chartered banks have left, a flight of capital, leaving no financial services in their wake. People do not know that the charter banks have obligations. The charter banks of Canada were given the exclusive rights and privileges to certain very lucrative financial transactions, such as credit card statements, cheque cashing, et cetera, in exchange for providing basic service to Canadians, even when sometimes it is not the most profitable thing in the world to give ma and pa their little mortgage in downtown Winnipeg, even when it is not that profitable to allow people to open bank accounts to cash cheques even when they only have $100.
However, the banks have an obligation and a duty. If the charter banks are not willing to live up to their end of the bargain, we should tear up their charter, throw the industry wide open to foreign banks and see how they like it then. That is what they have done in some other countries when the charter banks got too big for their britches. We would not have this problem in the inner city of Winnipeg and other major Canadian cities if the banks were doing their job by providing basic financial services.
As such, the people who I know, the low income people in the inner city of Winnipeg, have no alternative, nowhere else to go to cash their cheques. They actually sport their Money Mart card, which is, frankly, a licence to be robbed, as one of their main pieces of identification. I have used the phrase before that villainy wears many masks, none so treacherous as the mask of virtue.
These Money Mart stores are trying to portray themselves as providing a necessary service. They set up brightly lit, friendly looking stores, are courteous to the low income people who walk in and they issue important looking cards that are not even credit cards but just ID cards for the Money Marts. People carry them around with some pride because the banks will not talk to them, aside from the fact banks are nowhere to be found. People do not have bank accounts but they do have Money Mart cards.
I have never been able to calculate the amount of money that gets sucked out of my riding every month by these thieves. I will call them thieves, at least until such time as the Criminal Code is changed to where we allow greater than 60% interest to be charged. They are involved in illegal activity and we are accommodating them with this bill. Instead of correcting the problem, the bill actually says that we will not stop this runaway roller coaster so we had better change the law to make it legal.
At least we are ceding the jurisdiction to the provinces so they can hopefully put in place some enabling legislation to control and contain the extent of the problem because the extent of the problem is horrific. These outfits are sprouting up like poisonous mushrooms on every street corner, if I can be forgiven for extending that analogy, because their corporate greed is responsible for a sum total of human misery on the streets of the inner city of Winnipeg that I do not think we can measure.
The very fact that people cannot make ends meet on their meagre paycheques and are forced to obtain one of these payday loans already means they are in some form of financial crisis. It is not the people we see on the TV ads, well dressed, middle class people driving their cars up to the Money Mart because they are $100 short on this month's paycheque.
The way these outfits are structured, people's problems are compounded. Their misery is only starting with the first loan because if they are a day late on that loan, they offer a rollover loan at an even higher rate of interest and more service charges. These companies suck people in and roll the money over until people have reached a level of debt that they can never get out of.
Here are other things that these outfits do. It is common practice to have people voluntarily sign a permit so their future wages can be garnished, never mind going through the courts. If somebody owes a great deal of money, sometimes companies need to apply to the courts to garnish someone's wages. However, payday companies make people sign this away at the front end.
These companies will make people put up property, if they have it, as collateral even for a couple of hundred dollar loan, which seems ridiculous, except that they know how fast a $200 loan spirals out of control to where all of a sudden it is not so ridiculous to have a house as collateral for that loan because the loan is not $200 for very long. Cars and boats are not unusual personal guarantees. Sometimes people need to sign away their right to any kind of arbitration or to the services of a credit manager.
These companies have not only figured out how to charge 1,000% or 2,000% interest, they have figured out ways to preclude the ordinary rights that people might have if they run into credit difficulty to get out from under it. In other words, they own people. Loansharking seems kind compared to these payday loans. I kind of pine for the days when it was just Luigi the leg-breaker who would take care of things. These guys are far more sinister, far more organized, far more corrupt and far more criminal. The leg-breaking that used to go on if people borrowed money at the pool hall, we would probably look forward to that compared to the hold that these companies have.
It is criminal behaviour. It is organized crime. There are chains of these companies, in effect, breaking the law systematically, the very definition of organized crime. Our reaction as a government, unfortunately, is to accommodate them and to pass legislation to allow these companies to charge more than 60% per annum. It does not say that they can charge 2,000% or 10,000% per annum as in the most extreme case that we have come across, but to accommodate them in any way is offensive to the sensibilities of any decent Canadian.
It should make us angry. It should make Canadians angry that the best thing we can think of to do when faced with this organized wholesale criminal activity is to accommodate them when we should be looking at our financial institutions to look at the root cause of the problem, which is abandonment by the charter banks.
The charter banks have packed up their tent and left, not because these branches in the inner city were not profitable, but because they were not profitable enough. Because their branch in the suburbs made more money than the branch in the inner city, they put an addition on the branch in the suburb and told their customers in the inner city to take a bus out to that branch. They closed 15 branches in my riding alone in the inner city of Winnipeg.
It is abandonment. It is a vote of non-confidence. It would not bother me if these were independent private businesses because it is their right to pack up and leave. However, these are charter banks. They exist and enjoy their exclusive monopolies at the pleasure of the House of Commons and the Government of Canada. Has nobody tried to remind the financial institutions of their obligations in recent years? They are making record profits quarter after quarter. They cannot count their money. They are like Scrooge McDuck sitting on piles of money that they cannot even imagine their good fortune and yet they are derelict of their duties and leaving the people I represent vulnerable to rip-offs like the payday loan industry.
The payday loan industry even has an association now, which is how they are striving for legitimacy. Can anyone guess who the executive director of the Payday Loan Association of Canada is?
