Government Attacks Payday Loan Industry
The Federal government has a spending problem. The Federal government has
more debt than it can possibly pay. The Federal government is now monetizing
(buying) its own debt at the rate of $85 billion per month.
So how do Federal regulators react to the above problems? They want to put
a crimp into America's borrowing habits by restricting the American consumer.
That will solve the Federal problem
for sure!
Three federal agencies are working in concert to eliminate the
high-interest, short-term loans known as "payday loans". Their logic? They think
too many Americans are getting trapped in a cycle of debt, using a new loan to
repay an old one and want to save the American debtor from himself.
The Consumer Financial Protection Bureau, created to "protect" American
consumers from the evil clutches of those awful bankers who twisted arms and
threatened offspring if the poor parents didn't take the offered home
loan between 2001-2007 even though the parents no longer were required to show
proof of ability to repay the loan; the Federal Deposit Insurance Corporation,
who has its finger in every bank account in America and probably inspired the
test run on banking haircuts in Cyprus; and, The Office of the Comptroller of
the Currency, who does nothing but duplicate the efforts of the previous two
since they and the Federal Reserve were created, have all gotten together and
determined it is in your best interest for them to eliminate or at least
put severe restrictions on the malicious payday loan industry.
The trio of miscreants analyzed a study, paid for by a government grant,
that showed Americans are not using payday loans properly or in accordance with
industry claims. Americans who use the loans are doing so much repeat business
they soon are in a position of dependence on the expensive loans.
CFPB Director Richard Cordray said, "The loans, while designed for
short-term, emergency use, are leading many consumers into long-term, expensive
burdens that can't be repaid. We will consider the effectiveness of limitations,
such as cooling-off periods, in curbing sustained use and other harms."(1)
That sounds suspiciously familiar.
Wasn't that the same thing, in reverse, that was said by Rep. Barney Frank
when he presented his plan for altering the basis for home mortgages in August,
2000. "We must not burden the home buyer with the basic right to keep his
dignity in the loan proceeding. His willingness to repay his obligation should
be enough of a consideration for any lender to make a reasonable assessment for
loan qualification upon."(2)
When you remove one item from a working plan, you damage an entire industry
sector which damages the entire economy which we saw in 2007 until now. Can
America's staggering economy sustain another blow at this time?
Think of all the appliances, food, gas, restaurants, movie theaters,
concerts, etc. that will be hurt because Mom and Dad cannot get that payday loan
for an evening away from the kids or replace something that broke down. The
trickle down effect could decimate the entire economy. Not to mention the tax
revenue acquired by government from such a lucrative business that can
have effective interest rates of 285% APR--285% pure taxable profit for each
dollar lent.
How well is the economy going to withstand an this assault on free
enterprise of an ever-diminishing value item (the dollar) in the truest sense of
capitalist values when it could trim an estimated $1.2 trillion from our
current GDP?
If you refer to paragraph one above, why aren't these bureaucratic bozos
going after the vaunted elected officials for the same thing?
Isn't this a nation founded by "We the People"? What's fair for one should
be applied to all. If they are there to protect us why don't they protect us
from the Washington overspending first. Really, what's $1.2 trillion when we
have a federal deficit approaching $17 trillion, a sequester still running and
an economy that keeps slipping into idle?
Americans, unfortunately, learned the lesson of spending beyond their means
from Washington itself but we could save over $2.6 billion annually--forever--by
eliminating the three agencies that cooked up this scheme? That's $85 per year
for each and every American.(3)
It isn't much but with that kind of additional annual income, maybe some
people could actually avoid having to go the payday loan route in the first
place.
"I have sworn on the altar of God eternal hostility
to every form of tyranny over the mind of man."--Thomas
Jefferson
(1)--Bloomberg News, 4-24-2013, "Payday Loan
Restrictions Considered by 3 Agencies
(2)--Associated Press, 8-14-2000, "Mortgage Qualification
Changes Applauded"
(3)--General Accounting Office, 2-23-2013, "President's
Budget"
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