Tuesday, December 09, 2014

Lawless Administration

This is what's wrong with electing Utopia seekers:

Senior officials at the Federal Deposit Insurance Corporation actively sought to crack down on legal businesses that the Obama administration – or the officials themselves – deemed morally objectionable, a new congressional report finds.

Released today by the House Oversight and Government Reform Committee, the 20-page investigative report details how the FDIC worked closely with the Justice Department to implement Operation Choke Point, a secretive program that seeks to cut off the financial lifeblood of payday lenders and other industries the administration doesn’t like.
The FDIC is the primary agency responsible for regulating and auditing more than 4,500 U.S. banks.
Emails unearthed by investigators show regulatory officials scheming to influence banks’ decisions on who to do business with by labeling certain industries “reputational risks,” ensuring banks “get the message” about the businesses the regulators don’t like, and pressuring banks to cut credit or close those accounts, effectively driving enterprises out of business.
I, by the way, agree that payday lenders are scum. They take advantage of people in desperate situations. (and the stupid, and those with no math skills) They're bums, and put one at my table, I'll go sit somewhere else. But we have usury laws. And we are a nation of laws.

If a payday loan company is abusing consumers, you make laws to limit APR, or deceptive practices, or whatever. Then enforce those laws.

And by the way, I don't see the Government of the Light getting upset at banks whose Visa cards shoot up to the 20-30% APR range if a single payment  is late.

It's even more reprehensible for the Administration to wield the big nasty IRS club against its political "enemies", but these guys see themselves as above the law. Thank goodness we've started voting them out.


OregonGuy said...

The impulse to limit the activities of others is understandable. You only want to do it for their own good.

Oregon used to have an usury law. It was repealed when interest rates climbed above 12 percent. It seemed a reasonable law before interest rates rose above a rate approaching 12 percent in the 1970's. When the interest rate approached 12 percent, you couldn't get a loan in Oregon.

That being said, both lenders and borrowers should have risk. Times were, if you decided to declare bankruptcy, all your debt was pretty much wiped clean. Not so much anymore. Sure, it's great protection for the credit card companies and the banks who issue them, but it does reduce the price they pay for their bad decisions.

When you realize that you're about to be hit with service fees from your bank because a big check hit before your deposit, the fees you pay for a "payday" loan seem small. Big check comes in, and then you get hit with fees for the next seven little checks...that you'd thought would clear.

People make mistakes. Going to a payday lender to avoid costs may seem like a bad idea...

If only we could regulate all of our activities. What we eat. The size of our home. You know, everything you'd find in your normal utopia.

Silly. But understandable. The impulse to do good is a virtue, right?

Veeshir said...

A couple years ago, as this was going on, the Obama admin started talking about how they wanted the USPS to get into the payday lending biz.

You really cannot be too paranoid about this admin.

lumberjack said...

That sounds like our president: trying to put them out of business, not because they take advantage of the little guy, but because the government wants in on the action.