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Payday loansThe Charlotte Observer hits a home run this morning with this editorial entitled “An industry that hasn’t been missed.” As the authors make clear, North Carolina elected leaders should continue to use all tools at their disposal to resist the efforts of “payday loan” sharks to reintroduce their predatory (and long banned) 400% loans into our state. The conclusion of the editorial sums things up nicely:

“Congress recognized the predatory nature of the industry and in strong bipartisan fashion in 2007 capped interest rates at 36 percent APR on loans made to active military members and their families. It was right for our armed forces, and it’s right for everyone else.

It’s not a partisan issue. Many Republicans and Democrats alike oppose the practice, and some in each party support it. Whether you’re morally offended by a 400 percent interest rate or just see the damage it does to those who can least afford it, there’s a lot not to like.

Congress should ban the practice nationwide. Until that happens, the Consumer Financial Protection Bureau should install rules banning some of the most nefarious practices. And North Carolina legislators should stand firm and tell payday lenders: We don’t want your money.”

Click here to read the entire editorial.

And click here to get the full skinny on this morally bankrupt industry.

Commentary

Conservative politicians whose campaigns are funded by corporate interests love to talk about the “genius of the market” and “clamping down on burdensome business regulations.” And while there are no doubt many important virtues associated with both of those concepts, here’s what the genius of the market and business deregulation produce much too often in modern America: exploitation and rip-offs.

A new WRAL news story last night explored a classic example: the targeting of military personnel by scamming, high-cost sales outlets like USA Living. As reporter Monica Laliberte explained:

USA Discounters targeted the military with its patriotic vibe by posting advertisements on a Fort Bragg website and sponsoring military events. The company sells everything from furniture and TVs to jewelry and appliances and even car rims. It promises military members are “always approved for credit.”

Trill’s contract included fees of $1,057 for a warranty and $828.84 for debt cancellation, which covers the debt if something happens to him. The finance charge was $2,065.47. All paid, the furniture that was priced at $5,000 would ultimately cost him $10,513.88.

The next time someone feeds you the line about burdensome business regulations (like next week across the Thanksgiving table, for example) tell them about scams like this in which American heroes are targeted every day. And then remind them that this is why we have to have business regulation in America; not just to protect consumers (because if companies will rip off military families, you know they won’t hesitate to do the same to anyone else), but also to level the playing filed for businesses that operate ethically and honestly. After all, as the veteran/victim in the WRAL story noted:

“Is this the world we fought for? I mean, is this really what you fought for?” Trill said. “Everybody’s scamming everybody. Everyone’s trying to dip into your pockets for a little bit extra. It absolutely makes me sick.”

Commentary

Loan sharksIt’s one thing for progressive pundits and advocates to talk in generalities about what the election of Thom Tillis and his conservative colleagues to the U.S. Senate will mean in the policy world next year, but here’s a much more concrete and troubling example of what we have to look forward to. According to a pair of global banking giants, scalawag, for-profit colleges are now a hot investment opportunity.

As reported this morning by Alan Pyke at Think Progress:

Investment advisers from both Credit Suisse and BMO Capital Markets issued research notes this week connecting the Republican victories on Tuesday to an improved outlook for education companies. The analyses were based primarily on future legislative predictions. The Higher Education Act needs to be renewed, and BMO’s Jeffrey Silber argued that a Republican Senate will produce a bill that is much friendlier to the companies that run for-profit schools, according to Buzzfeed. Credit Suisse wrote in Barron’s that the “diminished regulatory risk characteristics of a Republican-controlled electorate” makes student lending company stocks likely to rise in value because “Republicans have historically fought detrimental legislation originating from Congressional Democrats.”

Here’s what that means when translated to everyday English: With conservatives exercising complete control over Congress, lobbyists for all sort of sharks and con artists will be like pigs in slop more than ever before. And one of the top scamming industries these days in modern America is the for-profit college business. As the article notes:

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Commentary

Predatory loansIn case you missed it over the weekend, the New York Times ran a thoroughly logical editorial that rightfully called for federal regulation to crack down on the scam artists who sell payday loans and other similar debt traps in numerous states across the country.

As the editorial rightfully notes, it’s all well and good to propose and enact laws like the “Military Lending Act,” which seeks to prevent our military personnel from getting caught up in these rip-offs, but the same logic obviously applies to other vulnerable consumers as well:

“Poor and working-class people across the country are being driven into poverty and default by deceptively packaged, usuriously priced loans. The obvious solution is a national standard for consumer lending. Both the House and Senate have bills pending that would adopt the 36 percent standard for all consumer transactions, including those involving payday loans, mortgages, car loans, credit cards, overdraft loans and so on.”

And while North Carolina has done a better job than many states in protecting its citizenry from the scammers, there’s plenty that comprehensive federal regulation which sets a ceiling on rates would do to benefit us — not the least of which is the way it could cut back on the flood of money spent by the loan industry on buying political influence and corrupting our politics.

The bottom line: What’s good for protecting our service members is good for protecting all consumers. If Congress had even a smidgen of courage, it would enact such legislation ASAP.

 

Uncategorized

Technical corrections billAs previously reported here, here and numerous other places, this year’s “technical corrections” bill at the General Assembly was and is an especially egregious example of secret legislative sausage making at its worst. The bill is chock-full of substantive (i.e. a lot more than “technical”) changes to the law – many of which were never even the subject of separate legislation – much less public hearings or debate.

A classic example is buried on page 20 of the 58-page, 94-section special interest Christmas Tree. The official explanation from legislative staff and even the explanation from some legislators in committee and on the floor suggested the provision added needed protections or in some manner merely “clarifies” an “ambiguity” in the state’s anti-predatory lending law by specifying that first loans on manufactured homes are also covered.

Sounds innocuous and maybe even okay, right?

Here’s the problem (and the reason why baloney like this shouldn’t get mislabeled as “technical” and then passed in the wee hours of the legislative session when no one is even paying attention):

The manufactured housing industry asked for the change so that lenders would be able to charge an upfront “origination” fee when they sell a manufactured home by itself – i.e. in situations in which no land is involved in the transaction. Currently, under the law in question, a lender can charge such a fee but only where the manufactured home is sold attached to real estate. With this last minute “technical correction,” the barn door is now open to the assessment of such a fee with all manufactured home sales – even though there was never a bill on the subject or a genuine public discussion at the General Assembly on the merits (and problems) of such an idea  This is obviously a big deal that will cost the state’s consumers millions of dollars in the years to come.

The bottom line: It’s not surprising that an industry long known for selling marginal products with the deceptive tactics perfected in the used car business would support squeezing yet another fee from what are typically unsophisticated, lower income consumers. And sadly, it’s even less surprising that the folks currently running the General Assembly would blithely label the legalization of such a rip-off as a “technical correction.”

FYI –  the Governor has until next Tuesday to sign the bill and has given no indication that he will do otherwise.