Might as well screw the soldiers, too
Credit Slips, and NACA general counsel Ira Rheingold point out that Senator Tim Johnson of South Dakota wants to roll back the recent legislation limiting interest rates on loans to service members. This was a landmark piece of legislation, although we would rather see it applied to the entire lending industry. Who really needs more than 36% interest, anyway?
Apparently, Senator Johnson thinks that the law “may have a lot of unintended consequences that will go far beyond just the payday industry” and says that “[w]e are going to have to revisit that issue and make sure that the end result of this legislation isn’t to deny military members and their families access to banking services that they’ve always assumed would be there.” Somehow that just doesn’t square.
Here’s what we think is going on. Under federal law, the interest rates a lender may charge are governed by the laws of the state in which the lender is incorporated. Take a look at the information for your credit card when you get a chance. There is a 100% chance (well, maybe there’s a rogue, but I don’t see how they would stay in business) your credit card company is incorporated in either Delaware or South Dakota. Your payday lender? Same thing.
Wonder why that is? Guess which states have no usury law. Yup. Delaware and South Dakota.
Wait, where was Senator Johnson from again? Oh yeah, South Dakota. It all makes sense now.
Just goes to show you, it doesn’t matter who is in Congress; few politicians are on the side of consumers.
[...] “The Deuteronomic Code was written during a period in which the wealth in Israelite society was ‘badly distributed and often ill-gotten,’ and the laws reflect this.” (At 164) Insert cheap shot here. Why is it that when wealth was badly distributed in Israelite society, the laws reflected that by declaring death and damnation for gouging the poor? By contrast, wealth is badly distributed (and often ill-gotten) today, yet our legislatures carve out usury exceptions for payday lenders, amend and weaken the FDCPA, and “reform” bankruptcy? Get with the (Biblical) times, Senator. [...]
[...] Rasor compares “motive clauses” in Biblical law to modern-day statements of purpose in our statutes, noting that both are intended to inspire “intelligent obedience” (at 165-6). “The debate [on consumer credit law] is influenced by appeals to humanitarian concerns . . . [as] evidenced by the pro-consumer rhetoric found on both sides of the debate.” (At 172) Again, it reminded me of recent discussion of Senator Tim Johnson’s attempt to derail usury protections for U.S. soldiers. As the commentators point out, the stated motives behind “deregulation” (or in this case, de-de-deregulation”) often claim the high ground for consumer freedom. Rasor gives a good back and forth of the arguments for and against usury caps, at 173-4. “Free Market” justifications for taking advantage of the vulnerable has rarely resonatedwith me, but the arguments are there. [...]
[...] South Dakota’s Senator Tim Johnson, the key to the DFL/Democrat Senate majority, are doing everything they can to prevent that from [...]