Beneficial State Bank charged auto loan borrowers as high as 27.99 percent interest rate
In one of his many campaign ads airing across California, presidential candidate Tom Steyer has touted the work of a nonprofit-owned bank he founded, portraying it as a counterweight to Wall Street corruption.
But while the Oakland-based institution has a well-regarded record of making socially responsible investments, its auto loan program has left behind a long trail of defaults and lawsuits against low-income borrowers in the state, a Bay Area News Group review of financial and legal documents found.
Beneficial State Bank — which Steyer co-founded with his wife, Kat Taylor, and served as board chairman until joining the presidential race in July 2019 — has filed lawsuits and won court judgments against 1,800 borrowers who fell behind on their payments over the past three-and-a-half years, out of more than 22,000 total loans, according to court records and data provided by bank executives.
Most of the lawsuits were concentrated in some of California’s poorest Central Valley counties. One lawyer who’s represented borrowers in numerous car lending cases called the bank’s litigation strategy the most aggressive he’d seen by an auto lender to collect on loans.
In interviews, a janitor, meat cutter, preschool teacher and hotel manager who defaulted on loans from Beneficial and were sued by the bank described spiraling into debt, unable to keep up with annual interest rates as high as 27.99 percent — only to lose their cars to repossession. None of them had any idea that the bank that brought them to court was founded by a billionaire candidate for president.
“I kinda thought we were getting robbed,” said Justin Casto, who works at an Oakdale meat company and received a 27.99 percent loan from the bank. “There’s no way I’m able to pay what they’re asking for, and my credit is so shot now it’s unreal.”