Patricia Nell Warren

Legalized Loan-sharking

Filed By Patricia Nell Warren | January 12, 2008 1:15 PM | comments

Filed in: Fundie Watch, Living, Politics
Tags: lending industry, loan sharking, mortgage

The human face of all the devastation created by the credit industry is finally looming on the news. Yesterday, news media put the spotlight on Cleveland mayor Frank Jackson. His Honor is mad as hell at what home foreclosures and personal bankruptcies have done to his city, and he is suing 21 banks. The news cameras panned across the neighborhoods blighted by abandoned and looted houses. The costs to his city -- lost property value, lost tax revenue, growing crime in those neighborhoods, need to demo abandoned houses -- are devastating.

Way to go, Mayor Jackson. I'm not in favor of driving these banks into closure, because that will hurt the country even more. But I hope you get a judgment that requires these corporations to stop abusive lending and help rebuild your city. I hope some key executives are ordered by a wrathful judge to roll up their sleeves and work on cleanup crews as part of their sentence. They need to accept their share of personal responsibility for the misery.

It's time for Americans start fighting the bloodthirsty lending practices that have become legitimized in our country. Such practices used to be called "usury." That was a good old word of the ancient world, and it mostly referred to high-interest lending. Since ancient times the practice has been periodically condemned by thinking people -- but it always comes creeping back, because the opportunity to make a lot of money off a borrower's desperation is too hard for some people to resist. Today the word "usury" has somehow lost its force. So I prefer to use the phrase "legalized loan sharking."

Loan sharking is illegal, because these high-interest private loans to vulnerable individuals are often backed up by threats of blackmail or violence. Like, "If you don't pay, we'll come and break your knees." But hey, the legalized loan sharking of today uses a less direct kind of blackmail to get you to pay -- including the threat of lawsuits, bad credit and harassment by collection agencies. Broken knees or broken life -- they both hurt.

In my opinion, legalized loan-sharking includes not only the now-famous sub-prime mortgages, but also the high interest rates being charged on some credit cards, student loans, farm loans, and lines of credit for small business.

I'm amazed how these big corporations are allowed to parade their ads across our TV screens, alleging that they "care" about their customers -- that their high-interest services provide "freedom" and the "good life." If ever there was a truth-in-advertising issue, this is it. What these corporations really care about is having guaranteed and protected profits from American citizens (including growing numbers of young people) who obediently wear the invisible shackles of life-time debt.

Don't get me wrong -- I don't think that banks are evil. Banking and lending have been around since ancient times, in some form or other. They are a convenience for the commerce that is the lifeblood of every civilization. It's the abuses that are the problem -- the difference between 5 percent and 30 percent on credit-card interest. It's hard to understand how our government has allowed these abuses to become established as legal, even desirable. But then it's hard to understand a lot of things that our elected representatives are sticking us with.

Most of all, it's hard to understand why the average American has put up with the growing abuses. I have to include myself, as a user of credit cards and veteran of re-fi's. Many of us have gone along in a daily illusion that there's not a straight line of consequences between our personal check ledgers and what the Fed does. We've been party to a national fiscal policy that is not only fundamentally flawed but actually suicidal. Why? Because our economy is pegged on consumer "spend, spend, spend" with borrowed money. Sooner or later that pyramid of spending is going to collapse under the weight of compounding debt. But the warning signs have been there for several years now -- the hints from Life that we've been living in a bubble that is now bursting in a horrific way.

Fortunately the slowing spending of 2007 show that many of us are finally waking up.

The next story that news media need to do? Put a face on the Cleveland families and individuals who vacated all those ruined homes. What happened to them? Are they on the street now?

Oh, and what do the Presidential candidates have to say about their willingness to halt these abuses? We all need to know.

Copyright (c) 2008 by Patricia Nell Warren. All rights reserved.

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Hi Patricia this was all set up back in 1913. The let out enough rope in the early 20's for the stock players to make a noose and they pulled it tight in 29.. then they tightened up internist rates and made several small banks fail in 30 and 31. causing the banking collapse. FDR took the only money the American people had (gold) paid them $20.00 an OZ for it and raised the price of gold to $35,00 devaluing the dollar. by a third. The handwriting has been on the wall since the late 80's.
Look at the price of gold now $900.00. A dollar will only buy $06.25 of what a silver would buy back in
Nixon's time.

The bankers are trying to get their peace of
America before the whole thing crashes and burns.

Look at the Dow Jones Index down over 700 points since Monday.

You know i don't have anything to loose in this....
But i feel sorry for all of you who have money in
401.K's You might see a third of the principal
if you are lucky.

It's a Damned good time to be old.

Take care

One of my exes got in trouble with one of those PayDay loans places. You know, you write them a check and they hold it until pay day. You pay them back or they cash the check. You write the check for $65 and they give you $50 now. Except those amounts go up considerably and the average interest rate when you stop to work it out is HUGE.

At one point, he started trying to "balance" them. He'd wait until X check was due to be paid off at A Loans. Then he'd go do ANOTHER loan at B Loans and make it enough to pay off the first PLUS give him a bit of cash in his pocket.

Eventually he ended up owing 2 or 3 of those places quite a bit of cash and couldn't pay them. The worst part? 3 bounced checks which got turned over to the prosector for "fraud."

Bil that is really bad Talk about selling your soul..

I will just stick with my one 18% credit card.

Take care

There is no doubt that people are overextending themselves with easy credit and ending up with foreclosures. As for me, I left Cleveland seven years ago because of other deterioration.

I considered buying the house across the street from me on E. 59th St., because it had been boarded up for a while, and I thought I could have improved it and done some good for the neighborhood. After I inspected the foundation, I passed on the opportunity. The asking price? $11,000.

No joke. But then, I bought my place for $17,000- cash. Ah, living in the inner city... I enjoyed it for a few years, but then it got to be just too much like banging my head against the wall. I'll never forget coming home from work only to find a man stealing the aluminum from my home by tearing it off. At 4pm.

Now, when your city's housing stock and neighborhoods are like this, you might consider that there is a bigger problem than folks gobbling up too much credit. Or, if you have people taking out zero-down, 30-year loans on properties like these, the problems are larger still, and again not related to banks.

We would do well as a society to have the self-discipline to live within our means. Living in that neighborhood was very rough. It was, however, what I could afford.

It's easy to point out the greed of the banker who issues the loan to the person whom he can see can't afford it should any bump or ruffle be encountered. But let's also focus on the greed of the person who accepts such a loan, under such circumstances. They are every bit as complicit in the same fraud. Indeed, their averice leads to abandoned buildings and wounds the neighborhood they temporarily inhabited, and lowers the value of the property owned by the innocent people left standing. This latter group are the real victims. Let's put a face on them.

It's hard to understand how our government has allowed these abuses to become established as legal, even desirable.

Patricia, I was surprised to read you making this statement. This is all too easy to believe: Just like the recent re-vamp of the federal bankruptcy laws empowers creditors to squeeze blood out of turnips, the credit lending laws have been eroded by lawmakers, on the take from credit industry lobbyists, to the point that they allow the lender to do almost anything. The credit industry gets our money, and the first bill they pay is to their small army of lobbyists --- and the lawmakers they have in tow. There's a clear reason why the word "usury" has fallen out of fashion!

Most of all, it's hard to understand why the average American has put up with the growing abuses.

Exactly! The only thing that can win against the credit industry's army of lobbyists is a voter uprising. Until voters insist on electing only lawmakers that will keep the credit industry fair, this fleece-job will only get worse and worse. Unfortunately, I fear that too many voters are distracted by the man threatening to break their legs to do much clear thinking about their voting power.