Posted on 05/16/2016 5:06:52 AM PDT by Cheerio
The Obama administration is using aggressive new tactics to go after payday lenders in an effort to shut down part of an industry it targeted previously in Operation Choke Point.
The Department of Justice has used the mob-inspired Racketeer Influenced Corrupt Organization Act, known as RICO, to go after payday lenders in at least three different cases. Those cases involved Native American tribes providing online loans to people in a number of states at rates that exceed limits imposed by those states. Since the tribes enjoy immunity from federal prosecution for violating the interest rate limits imposed by states, the agency went after their partners and lawyers for conspiring with the tribes to break the limits.
“The government’s decision to extend RICO’s ‘collection of an unlawful debt’ language to online payday lenders is a significant moment in federal law enforcement,” American Banker said of the move. “If this new theory of law enforcement survives legal challenges, look for the government to continue using it in the online payday lending industry and potentially beyond.”
(Excerpt) Read more at freebeacon.com ...
Personally, I thing payday loan lenders are sleezebags and applauded when Pennsylvania shut ours down several years ago. But that’s the key. It is not a job for Fedzilla.
-—Those cases involved Native American tribes providing online loans...-—
Let’s get some racism allegations going against this illegal jawboning by the DOJ.
Unfortunately big media is still wearing their Presidential kneepads...
“Unfortunately big media is still wearing their Presidential kneepads...”
For now that is. The Donald is doing a good job removing them.
You know a neighborhood is going down the toilet when these places spring up. They are getting closer to my neighborhood...
Bingo. Payday lenders are criminal shysters who probably ought to be made illegal. Gun dealers are a legal and honorable business.
Payday lenders, title loan establishments, and buy-here-pay-here car dealers are a market reaction to federal government interventions in banking. They've all been around since the sixties, but really began to boom after Dodd-Frank, which was possessed of overly extreme aversion to risk. It can be argued that this is a good thing, but these entities cropped up as a reaction by the market to fill a void. This phenomenon is demand-driven. Suddenly there was a huge under-served market to cater to (exploit?).
I'm sorry, they are being targeted by the CFPB because they serve Donkey party constituencies. Government not the hero. Can't have that.
Since the market is populated by "sleaze bags" who over-charge, why isn't it an opportunity for someone to enter the market on their white horse and undercut all the current players? Easy pickings, no?
If you are lending to people who have never paid anyone well, or have no collateral, you are taking risk. This risk must be priced. Over all, the industries above are very profitable. How can this be, if borrowers aren't actually paying the loans back? Customers of these institutions are not the ones complaining. Only those who don't live pay-check to pay-check are complaining.
The solution is taking another look at the regulations creating this void, not stamping out those filling it.
A far better solution would be to get rid of Dodd-Frank and allow more traditional financial institutions to fill this niche which probably won't happen for the reasons which you mention.
Back in 2012, when interest rates dived, I tried with almost every bank in the Pittsburgh area to refinance a 30 year mortgage in year 10 with a rate of over 6%. Because of less than near perfect credit, none of them would touch it. It was just not something the financial institutions in Pittsburgh wanted. But it turned out that one in Detroit (NOT the infamous one which advertises a lot) not only wanted it but gave me a 2.75% rate. That bank now has a branch in downtown Pittsburgh which is doing a land office business in what our regional banks turn down.
Competition is a good thing and Dodd-Frank disrupted a lot of it. Typical liberal economics-- screw up the market with over regulation, then step in and try to squash worse solutions which arise with even worse solutions still.
The payday loan people were banned from Arkansas and now are all on the Oklahoma side of the line in the Cherokee lands.
But then, Oklahoma always had high loan interest rate tops up to 25 %.
I’ve known people who got involved with them, borrowing a hundred dollars, and soon owing thousands back, mostly in interest rates.
I went by one of the stores last Christmas and there was a line outside and around the corner of people borrowing and paying loans.
Fifteen years ago, when we bought a refrigerator from a local dealer in Arkansas on Time payments, he sold the loan to an Oklahoma loan company across the line. When I saw what he had done I immediately took a local bank loan and paid it off, but each Christmas I get letters wanting to LEND! LEND! LEND!.
What really hacked me off is I went to our local bank (I had done business with them for forty years) to get a personal loan to pay off the high dollar loan, and found THEY now were charging an “Origination fee” on top of the interest, something they had NEVER done before! I’ve since closed my account with them, after forty years!
I personally despise these payday shysters and they all should be shut down.
I lived next to a Navajo reservation years ago and saw first hand how the “white man” took outlandish advantage of the Indians. Selling them TV sets, washers and dryers, electric appliances of all types and there was not a power line within 20 miles of their shack, house, hogan or whatever you want to call living quarters. Drive by on a dirt road and there was a TV antenna, washer and dryer sitting outside and not generator or power in sight.
It was a constant to screw the Navajo’s weekly as they came into town on Saturday and there were businesses set up on strategic locations on the way back to the reservation in order to get the last dollar in their pocket.
Payday loans, “we tote the not” type places are designed to take advantage of people that financially ignorant, Barnum was correct.
Yep. Interesting times, they be ahead.
Almost as sad as reading the plethora of posts from (supposed) Free Market (C) that call for the abolition of said risk-takers; pulling a Leftist move of “We know what’s better/best for YOU”.
As if a gun were held to ones head to sign on the dotted line. Bet most were screaming, “Tough toenails” to those during the housing bubble.
Well, bless their little hearts. /s
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