Wednesday, April 8, 2009
You have to admire the chutzpah of the U.S. House of Representatives led by Nanny “impeachment is off the table” Pelosi.
A House subcommittee wants to legalize so-called payday loans with interest rates of up to 391%. Lobbyists from the payday industry bought Congress’ support by showering influential members, including Chairman Luiz Gutierrez (D-IL) with campaign cash. Congressman Gutierrez is now playing good cop, bad cop with the payday industry, who is pretending to oppose his generous gift of a bill.
If this outrageous piece of legislation is passed, here’s a few examples of what loans repaid at 391% will cost the primarily poor and elderly borrowers who make up the bulk of the payday loan customer base:
a. $100 would be repaid in the amount of $391
b. $50 would be repaid in the amount of 195.50
c. $750 would be repaid in the amount of 2,932.50
d. And a loan of $2,000 would be repaid in the staggering amount of $7,820
After seeing members of the military fall victim to exorbitant payday loans, Congress in 2006 capped the interest for military payday loans at at 36% and fifteen states have similar caps or outright bans.
Congressman Gutierrez is competing with Congressman Joe Baca to see who can author the biggest giveaway to the industry. Baca’s legislation would allow rollovers, higher fees for online banks, and would preempt state laws banning payday loans.
Rep. Barney Frank needs to step up and punch Congressman Gutierrez in the face for shamelessly exploiting the poorest members of society who use these loans to pay for such items as utilities, food and rent.