As he blankets California’s airwaves with ads for his presidential campaign, a number of low-income Valley residents might be surprised to find out that the bank that repossessed their car and took them to court was founded by Tom Steyer and led by his wife, Kat Taylor.
A report from the Bay Area News Group found that Beneficial State Bank, a nonprofit bank launched by Steyer and his wife, built a reputation in stark contrast to its initial mission to improve financial access underserved communities and promote environmental stewardship.
The report found that the Steyer-founded financial institution issued auto loans with interest as high as 27.99 percent.
And for a surprising share of borrowers that fell behind on their car payments, the bank found itself embracing one arena to recover payments: the courts.
One borrower – JaNeé Moore, a Stockton preschool teacher – had her car repossessed by Beneficial after falling two months behind on her payments. The bank then took Moore to court and won a $13,800 judgment against her.
The teacher now has $225 garnished from her paycheck to repay the bank.
In an ironic twist, Moore is now reliant on payday loans to make daily living expenses, flying in the face of the Beneficial’s mission.
The Bay Area News Group report said that the bank sued and received judgments against 1,800 borrowers in the past 42 months out of a total of 22,000 loans.
“I have never seen such an aggressive utilization of litigation as a collection tool for an automobile loan portfolio,” attorney Mark Chavez told The Mercury News.
Chavez has defended a number of suits waged by auto lenders against borrowers.
Beneficial’s lending strategy originally belonged to Pan American National Bank, an Eastern Los Angeles and Central Valley-based bank.
Officials with Beneficial told the Mercury News that it wasn’t until 2018 that the company restructured its lending practices. However, it continues to charge those exceedingly high interest rates for borrowers who undertook loans before 2018.
Steyer stuck by his bank’s performance in attempting to help the underserved, but noted that not all low-income borrowers were going to be successful.
“There is no attempt here to do anything except run a loan program that gives people access to capital in a way that will help their lives,” the presidential candidate told the Mercury News. “If it doesn’t work in some case … do we feel terrible about that? Sure. Is that working out for us? Absolutely not. Is there anything deceptive or is there something we’re trying to get out of that? Absolutely not. But in a loan program, are some people not going to make it? Yeah.”
Later, he said that he was “disturbed” by the bank’s practice of charging borrowers interest beyond 25 percent. He added that he had “never heard that high number before.”
