A trail of money that began with triple-digit loans to troubled New Yorkers and wound through companies owned by a former used-car salesman in Tennessee led New York prosecutors on a yearlong hunt through the shadowy world of payday lending.And shadowy is a nice word for what goes on in this industry, where short-term loans with interest rates of 500 percent or even higher are all too common. And although most payday lenders are not what one might call big banks, behemoths such as JPMorgan Chase, Bank of America and Wells Fargo serve as "a critical link for the lenders," without which they could not do what they do. Amazingly, Wall Street has found yet another way to screw over Main Street.
On Monday, that investigation culminated with state prosecutors in Manhattan bringing criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of enabling payday loans that flouted the state’s limits on interest rates in loans to New Yorkers.
The news of the arrests in New York, where the criminal lenders got around the still-existing usury laws in that state by incorporating in the West Indies and hiding their tracks, combined with an absolute skewering of the payday loan industry by John Oliver on Sunday night, will hopefully focus the public's attention on these truly immoral practices. And, as Oliver pointed out, a key problem is that, the New York arrests aside, often these practices remain legal. In Ohio, after the state passed a law capping interest for short-term lenders, the sleazy payday loan people wriggled around it by registering as mortgage lenders and then making really, really small mortgage loans. Oliver asked, “Why even bother calling yourselves mortgage lenders? Why not just call yourself ‘peanut butter octopus’ companies? You can’t regulate peanut butter octopi; they don’t technically exist.”
Follow me for more—and John Oliver's video—below the fold.
Consumer Financial Protection Bureau Director Richard Cordray is definitely on the case of these lenders, and says he'll be taking action soon. But regulation is no substitute for legislation. Why can't we simply have a national ban on usury, a maximum interest rate for all loans? Sen. Bernie Sanders of Vermont led a push in 2009 to cap interest rates at 15 percent, which got 33 votes in the Senate, and President Obama endorsed a federal usury law in 2008. We enacted a law in 2006 that capped the interest on loans to military personnel at 36 percent. That's great for soldiers, who deserve to be protected from these sharks, but how about the rest of us?
What really galls me is the hypocrisy of people who claim our country should base its laws on biblical principles. The Bible has a lot to say about usury, none of it good (h/t greywolfe359). As on so many other economic issues, right-wing conservatives simply pick and choose the parts of the Bible that suit their worldview, one that the real Jesus—a serious progressive if there ever was one—would have condemned.
Now watch how Oliver consistently combines big laughs with 60 Minutes-style in depth analysis of major issues. His show is much more than just another version of "The Daily Show." I highly recommend it.