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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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.



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.


Add the Charlotte Observer to the long and growing list of voices opposed to the disingenuous plan cooked up by a group of insurance companies to get out from under the consumer protection regulation overseen by the state Insurance Commissioner. As this editorial notes this morning:

“Currently, auto insurance companies doing business in North Carolina have to agree to a rate increase or decrease each year with the N.C. Rate Bureau. The insurance commissioner, currently Wayne Goodwin, reviews those requests and decides if the rate change (usually a hike) is justified. The result of this unique system: North Carolina’s average auto insurance rates are the lowest in the South and sixth-lowest in the country.

Insurance companies would have you believe that N.C. drivers could do even better if the Rate Bureau just got out of the way and let insurers offer more discount programs. But the state already has approved about 2,000 such programs, and Goodwin supports legislation that would allow for even more – without dismantling the Rate Bureau structure. Insurers aren’t interested in that.

What they are interested in is charging more, which is what happened in South Carolina, where rates went up 23 percent after the state made a similar change in the 1990s. In North Carolina, reform might be especially bad news for some of the estimated 1 million drivers who are considered riskier by insurance companies. Most of those drivers are younger and have clean records, and the state allows the rest of us to be charged a small fee so that these ‘risks’ don’t have to pay exorbitant premiums. Change the system, and insurers could make more of a profit off them, as they do in other states.”

Read the entire editorial by clicking here.

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Fort BraggThere’s word from the General Assembly that the consumer finance industry is unhappy with state law designed to help protect active members of the military from exploitation. In case you’ve forgotten, the consumer finance industry runs more than 400 storefront shops throughout North Carolina that make loans featuring high interest rates and fees. The loans are often packed with junk insurance products and customers are also routinely “flipped” from one loan to another.

The provision at issue (G.S. 53-180.1) was enacted last year as part of legislation that gave the industry the authority to significantly raise the amounts it charges for loans. While failing to protect the rest of us from these predatory lending practices, the General Assembly was shamed into including some modest protections for military service members, whose paychecks are often targeted by the industry. The provision requires lenders to make sure that they do not extend loans to lower ranking enlisted personnel without at least notifying their commanding officers. It also prevents lenders from trying to collect on loans via phone or email from service members or their spouses while the service member is deployed to a dangerous area.

Now, less than a year after the protections were enacted, it appears that at least some lenders want the law (or its enforcement) weakened. For some time, it has been rumored that industry lobbyists have been working on such an effort and recently, insiders report, an industry representative confirmed the rumor.

In addition to raising the real prospect that junior service members could be exploited before heading off to Afghanistan or some other dangerous venue, such a potential change also raises important political issues in the Senate race between Senator Kay Hagan and House Speaker Thom Tillis. Read More