State legislatures are helping rich lenders rip-off the poor
1 min read
Loan sharks and their lobbyists really know how to put the "ick" in eth-icks.
Loan sharks and their lobbyists really know how to put the “ick” in eth-icks.
Though they’ve tried to buff-up their public image by calling themselves “consumer lenders,” their game remains the same ethical mess it’s always been. They target poor and financially struggling people, entice them to borrow with come-ons touting “quick & easy” money, then hook them to installment loans with interest rates up to 36 percent. At such rates, it’s hard for these hard-hit people to repay the bank on time, so most are forced to keep borrowing more money just to pay down the previous loans. To make this even ickier, the sharks are especially fond of setting up their loan offices around Army bases so they can prey on America’s low-paid, financially-stressed soldiers.
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The good news is that several state legislatures are taking action to provide relief. The bad news is that their relief is not for the borrowers, but the banks! With an army of lobbyists and a multimillion-dollar arsenal of campaign cash, the industry has already induced legislators to lift interest rate caps in eight states – most of which have a large number of military bases.
The cynical claim of the loan sharks (believe it or not) is that they are suffering financial hardships. These poormouthing bankers say that to make “an acceptable profit,” they must be allowed to charge borrowers more than 36 percent interest. Acceptable to whom? One of the largest purveyors of these loans, a subsidiary of Wall Street megabank Citigroup, reported a hefty 31-percent profit increase last year – under the old rate structure.
What we have here is a brazen purchase of legislative favoritism by some of the richest financial interests in America – allowing them to increase their exploitation of some of America’s poorest people. What’s “acceptable” about that? The whole scheme is a shameful hustle.
“States Ease Laws That Protected Poor Borrowers,” The New York Times, October 22, 2014.