Where do working families go when faced with an emergency? When the family car breaks down or needs a set of tires? When the AC needs servicing during a hot Florida summer? Or when your child needs that prom dress for the big dance?

I represent a community full of working families – with a median annual household income around $40,300 – who often need to place to go for short-term credit without being over-charged or taken advantage of.

Through the years we have turned to credit unions and community banks for some hope. I have been meeting recently with local representatives to press for solutions for working families who do not have bank accounts, but answers aren’t simple. The overhead and the established loan guidelines for banks have convinced them that they cannot provide an affordable loan in times of emergency for working families.

In addition, even those with bank accounts face costly overdraft and non-sufficient funds (NSF) fees – an unthinkable burden on many families. A recent report showed that, even with the huge penalties and fees, overdrawn checking accounts now serve as a form of short-term credit for many consumers. Last year alone, overdraft and NSF fees totaled $11.6 billion in revenue for U.S. banks, accounting for 8 percent of the reporting banks’ total net income.

My visits with credit unions have been more hopeful. Our efforts to provide additional short-term credit options have produced some creative ideas using tools that already exist.

For example, one option being pursued would use Credit Union Organizations (CUSOs), a cooperative approach that can pool the resources of various credit unions. I will continue to work with community-minded credit unions and hopefully bring new options to fruition. As for now, without credit unions and banks as a viable option, working families now turn to what we all agree are very imperfect sources – short-term leaders and cash advance shops.

Many payday lenders are a scourge on our neighbors and have history of taking advantage of people who are “unbanked” and need short-term credit and small dollar loans. I strongly support the Consumer Financial Protection Bureau (CFPB) and its efforts to ensure banks and lenders treat everyone fairly. Online payday lenders should be outlawed as they have been exposed for harsh tactics and outrageous fees. Cash advance shops that cannot survive but for outrageous interest rates should be closed.

I stood should-to-shoulder with President Obama to establish the CFPB and have fought against many Republican attempts to weaken it. CFPB is right to examine and propose rules for payday lenders, especially online lenders. Many of our neighbors who live paycheck-to-paycheck need access to short-term credit, but loan terms must be responsible and not prey on consumers.

Recent reports indicate that the Florida short-term lending model does not meet this test. Some even suggest that the Colorado law, which appears to have better protections, would not measure up either. Meanwhile, emergencies continue to happen every day and there must be some place for working families to go.

I have an office that works every day – all day – to fight though the red tape and bureaucratic barriers because some corporations and bureaucrats often do not appreciate the real life struggles of working families. I am more convinced than ever that local institutions, individuals and nonprofit groups must work together to develop solutions for access to short-term credit. We need a discussion that centers on what must be accomplished for working families: access to resources in an emergency.

Of course the larger focus must be on lifting the economic prospects for working families altogether. The American Dream we all believe in should not include such tough choices as whether to accept unfair loan terms or pay outrageous banking fees, just to provide for a family emergency.

More and better jobs and higher wages would ensure that when the car breaks down or the water heater rusts out you are not faced with these tough choices. I have worked with President Obama to boost the minimum wage, fight for equal pay for equal work, and expand access to health care for working families, but we cannot rest.

`We cannot leave our working family neighbors in this land of “what ought to be” when they live in the land of “what really is” and sometimes need to access to emergency funds. I pledge to continue to fight every day for my neighbors to bring about more jobs and higher wages, and in the meantime to support a more affordable source for them to turn to in times of need.

If you have you ideas and solutions for our group working on short-term credit, call or write to 813-871-2817 or Kathy.castor@mail.house.gov.  

--U.S. REP. KATHY CASTOR