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The Bible tells us that Jesus drove the moneychangers
out of the temple (for charging less, by the way, than we’re now
assessed on our Visa and MasterCard bills). Credit-card rates of 20 percent or so are ridiculous
— but what should we call an interest rate of 400 percent?
“Rip-off” is too nice of a word. “Gouging” fits,
but even it can’t convey the raw greed embodied in such a usurious
rate for the use of money. Charging 400 percent should be called criminal,
but lobbyists for the quick-cash industry have monkeywrenched state usury
laws to make such loan-sharking legal in 40 states. Worse, this legalized theft targets vulnerable
very-low-wage working people — those living paycheck to paycheck who
can least afford to have their pockets picked. They typically are given a
loan of $300, minus an upfront fee of about $50. Two weeks later, the full
$300 is due. Often the borrower can’t pay, so he or she takes out
another high-interest loan and is sucked even deeper into this lending
whirlpool. These “trapped borrowers” have become a
lucrative profit center for the lenders — who, by the way, are not
fly-by-night back-alley operators but well-manicured executives with a
gloss of corporate respectability. These quick-cash purveyors have about
24,000 flashy storefronts across the country, making them even more
ubiquitous than Starbucks. They rack up $40 billion a year in revenues,
maintain PR firms to perfume their practices, create political funds to
grease the necessary skids, and deploy armies of lobbyists to legalize
their usury. The good news is that states are beginning to rein in
these payday hucksters by capping their interest rates at a merely
outrageous level of 36 percent. For information, call the Center for
Responsible Lending at 919-313-8500 or go to www.responsiblelending.org.
Jim Hightower is a national radio commentator,
columnist, and author.
This article appears in Mar 6-12, 2008.
