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A personal event in my recent past has left me wanting to moderate the rage I felt regarding national politics.  It was making me bitter and angry, and pushing some important people away from me.  My focus has changed, to finding commonalities I share with people, rather than concentrating on intractable differences that neither is willing to change.  I still can't tolerate the corruption though.  I know there's a certain amount of corruption in every human organization and government is no exception, be it Democratic or Republican.  But the Republican party seems, at least to me, to have taken corruption to a completely different level, one actually evil and not in an intangible sense.  Geoff Davis (R-KY) is in a competitive house race, and he is actively working to enable theivery from my brothers and sisters in the military.  A Democrat must replace this man.

The Scene

As many as one in five members of the armed services are being preyed on by loan centers set up near military bases that can charge cash-strapped military families interest of 400% or more, a new Pentagon report has found.

Steep lending charges have long plagued servicemembers, but the problem has become a more urgent concern to the military as it has struggled to fill its ranks during the Iraq war. That's because debt troubles can keep troops from going overseas.

"We're seeing a growing trend of folks who are not eligible to deploy because of financial problems," says Capt. Mark Patton, commander of Naval Base Point Loma in California. Patton says debt problems can cost some servicemembers their security clearances.

---

Lenders typically charge $15 to $25 per $100 loan for two weeks, and most loans are extended for several weeks. The report says the average loan is $350 and has an annual interest rate of 390% to 780%. The average borrower, it says, pays back $834 for a $339 loan.

Unreal!  I know when I was in the military there were tons of these places just outside the gates of the base.  I had some understanding of what they were doing so I avoided them like the plague and just found ways to entertain myself with out money.  But there were plenty of guys who did use them, especially the ones with families.  Clammyc wrote about this report back in August, when it received very little attention from the press.

Congress is trying to address the problem, which obviously has become a national security issue.

The Conflict, Rich with Irony  

From Think Progress

The Pentagon has joined consumer, military, and veterans groups in backing a bipartisan amendment from Sens. Jim Talent (R-MO) and Bill Nelson (D-FL) that places a cap of 36 percent on high interest rates for short-term payday loans to military members.

But one conservative congressman, Rep. Geoff Davis (R-KY), is trying to gut the amendment. Davis has proposed his own language -- praised by the payday lending industry -- that sets no real limits on predatory lenders. One of Davis's aides admitted last week that he consulted on the legislation with "CNG Financial of Mason, Ohio, one of his top campaign donors and owner of national payday lender Check `n Go."

OMFG!  Yet another Republican, reeking of the dirty money smell that pervades loan sharks! Willing to endanger national security and suck our soldiers penniless at the bidding of his amoral, usurious buddies.  Truly wretched behavior.

The Payoff

So now its time to turn that anger into action.  This is a story that should deeply resonate with what's left of the GOP base.  I don't know anyone in Kentucky, but you might, so send them a link to this story.  Point out to them that its a Republican working to weaken our soldiers, and that its to a payday lender.  Anyone that's ever dealt with them knows what a ripoff they are, and now they've got a Republican in Kentucky that's bought and paid for.  

What's even better, Geoff Davis is ready to have an anvil tossed his way.:

In an election today, 9/19/2006, in Kentucky's 4th Congressional District, Democrat Ken Lucas leads Republican incumbent Geoff Davis, 48% to 44%, according to a SurveyUSA poll conducted exclusively for WCPO-TV Cincinnati. Since an identical SurveyUSA poll released 8/10/06, Lucas, who represented the 4th District from 1999 through 2004, has gained 4 points.

This guy is vulnerable.  Let's amplify this story as much as possible for two reasons:

*Impossible as it may seem, we should try and shame him into withdrawing his amending language that works for the payday lenders and doesn't work for our soldiers.  You can contact Davis's office at(202)225-3465 or at the toll-free congressional switchboard (ask for Davis's office) at (866) 808-0065.

*Davis's acts are the perfect symbol of the values of this modern GOP.  Many people who may be on the fence in terms of supporting a GOP candidate need just one more clear example of why they should not do that.  Here's one to which many people can relate.

Originally posted to lapin on Wed Sep 20, 2006 at 11:23 PM PDT.

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Comment Preferences

  •  The USA Today story actually had a funny quote (23+ / 0-)

    Such lending, the report says, hurts readiness and morale and "adds to the cost of fielding an all-volunteer fighting force."

    That's a misguided critique of a valuable service, says Darrin Andersen, president of the Community Financial Services Association of America, the payday lenders' trade group. The Pentagon, he says, "is in over its heads when it comes to ... complex personal finance and lending issues."

    He's an ass, but he may have something there.

  •  May these greedy vultures (6+ / 0-)

    all rot in hell.  I thought credit card companies were bad......

    "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." ~ H.L.Mencken

    by PoliSigh on Wed Sep 20, 2006 at 11:28:17 PM PDT

    •  I got a notice from my credit card company that (10+ / 0-)

      effective Sept 20, they will be forced to increase their interest rate from an annual 24% to 32%.  

      I pay my credit card charges right away, so I don't pay the interest, but I flipped out.  32% a year?!?!!
      Then I saw the 400% vultures on the base story.  I'm sick.  

      Who knew? Chamonix. But did he tell us? NO!

      by 2lucky on Wed Sep 20, 2006 at 11:45:10 PM PDT

      [ Parent ]

      •  That's what makes this story so powerful (3+ / 0-)
        Recommended by:
        PoliSigh, AllisonInSeattle, epppie

        it connects on many different levels.  How many of have credit card debt and are getting letters like yours?  Does this generate good will?  How many actually do care what happens to our military and see Republicans actively working against their best interests?

      •  Get a different credit card anyway (2+ / 0-)
        Recommended by:
        sodalis, epppie

        and let them know why.

        Pathetic.

        Be good to each other. It matters.

        by AllisonInSeattle on Thu Sep 21, 2006 at 01:07:53 AM PDT

        [ Parent ]

      •  Why they can do this. (2+ / 0-)
        Recommended by:
        LNK, kurt

        There's no easy to get out of unsecured debt via bankruptcy, thanks to the (thanks, Joe Biden!) Bankruptcy Reform Act of 2005, so there's no absolute default risk for the lenders.

        Since no one is going to walk away from their debts, no matter how much interest they are charged, there is no incentive for lenders to charge rates that reflect actual risk on the investment -- ie, giving you credit.

        "Give credit." There's an oxymoron for you.

        •  Oy. What kind of sham is it today? (1+ / 0-)
          Recommended by:
          kurt

          I've lectured my kid so much on the issue of being destroyed by usurious debt, that when I say say the word "debt", she's hands-up, "I know, I KNOW!!!!!!!!"

          I pray she does know.  

          Who knew? Chamonix. But did he tell us? NO!

          by 2lucky on Fri Sep 22, 2006 at 12:24:34 AM PDT

          [ Parent ]

    •  Vultures is right. n/t (1+ / 0-)
      Recommended by:
      epppie

      Be good to each other. It matters.

      by AllisonInSeattle on Thu Sep 21, 2006 at 01:07:11 AM PDT

      [ Parent ]

    •  I have to wonder about the motives (0+ / 0-)

      in finally looking into this.  These loan shark businesses have been preying on military folks as long as there has been a military - and it's only now that Congress is seriously concerned - it reeks of the GOP  - are they really concerned about the soldiers and families, or just that it is harder to get bodies to fill the ranks in their illegal war in Iraq?  I was never so skeptical of motives as I have become over the last 6 years.

      The military, for their part, does try to warn members about these predatory businesses, and provide financial counseling, but of course those services get cut pretty quickly when budgets are tight as they are now.

      It's unbelievable a crook like Davis would be profiting from businesses like this.  That is despicable.

  •  Usury was forbidden in the Bible... (9+ / 0-)

    ...Jesus threw the moneylenders out of the Temple, and Christians were banned from lending money well into the Middle Ages.  And yet I have no doubt Republicans will be courting the support of the loan sharks and speculators well into the future.

    Republican Convention Star Date 2546

    "Reality has a well-known liberal bias" -Stephen Colbert (-6.38/ -4.21)

    by wonkydonkey on Wed Sep 20, 2006 at 11:50:58 PM PDT

  •  Check out the military pay tables (5+ / 0-)

    Here  An E-4, which is corporal or Spec-4 in the Army, makes $1935 per month gross.  Tack on another $800 for seperate rations to live off base with their family and they could lose 1/3rd of their monthly pay to a payday lender. (I'm guessing the seperate rations rate here form when I was in, if anyone knows for sure what the rate really is please tell us).

  •  Why don't they cap the interest rates 4 everyone? (2+ / 0-)
    Recommended by:
    AllisonInSeattle, epppie

    I live in Japan and they passed a law that capped consumer finance loan (loan shark) interest rates at a still princely 29%.  It's so attractive that GE Finance and other foreign firms swooped in and started buying some of the consumer finance outfits a few years back.

    Obviously you don't want military guys with security clearances to have massive debts, but frankly the rates should be capped for everyone.

    Live Abroad?

    Had Enough?
    Register for the '06 elections at www.VoteFromAbroad.org

  •  So Infuriates me (1+ / 0-)
    Recommended by:
    epppie

    So infuriates me.

    Under any circumstances this infuriates me, to take advantage of people who need a short term loan.

    But here, particularly, let's toss out a few factors:
    --We have a poverty draft. The recruiters aggressively target poorer individuals -- people who, if they need a couple tires for their drive home to see the folks for the holidays, don't have a dad who'll say, "How are the tires on your car? OK, I will buy two for you to make sure you're safe"  

    No, we have a higher percentage of new recruits whose parents couldn't do that. So they need to buy the tires themselves.

    --And NOW, we have item #2. We don't pay these people squat, so they can't afford the tires themselves.

    --Item #3. We are paying CONTRACTORS 4-10 times as much as we pay the troops for doing the SAME JOBS. Those guys? Yeah, they don't need the payday loan to put food on their families or buy tires.

    --Item 4. Society should care to protect the weak and vulnerable from con artists. From liars, cheaters, etc.

    --Item 5. Since WHEN are congresscritters supposed to be about taking BRIBES to help people prey on each other?

    And so forth.

    Be good to each other. It matters.

    by AllisonInSeattle on Thu Sep 21, 2006 at 01:06:41 AM PDT

  •  Those check'n'go type places always seem (1+ / 0-)
    Recommended by:
    Voxbear

    to be in poor neighborhoods, don't they, and often right near a liquor store?
    I see it as a very predatory industry.  I see credit cards that way too.

    I think they should be allowed to charge whatever interests they want, but there should be a limit on what credit rates are enforceable.  If you take your interest rate up above a certain level, then the whole debt becomes unenforceable - something like that.

    I don't think it's reasonable to expect the government to help you collect on predatory and unreasonable loans.  If you want to do such loans, do them at your own risk.

    But then, maybe that would lead to a lot of "private" enforcement.

    a hope that may come close to despair

    by epppie on Thu Sep 21, 2006 at 03:31:39 AM PDT

  •  Oh, you haven't heard the half of it. (2+ / 0-)
    Recommended by:
    LNK, Snarcalita

    Welcome to the wonderful world of universal default rates:

    Credit card companies impose "universal default" rate hikes based on the way customers handle other credit accounts. This year, 45% of banks surveyed by CA said they have universal default policies - a slight increase from last year’s survey. According to customer service representatives, the following circumstances, in descending order of importance, can trigger a universal default rate hike:

    • Credit score gets worse: 90%
    • Paying mortgage, car loan or other credit obligations late: 86%
    • Going over credit limit: 57%
    • Bouncing a payment check: 52%
    • Too much debt: 43%
    • Too much available credit: 33%
    • Getting a new credit card: 33%
    • Inquiring about a car loan or mortgage: 24%

    CA found default rates as high as 35% (Merrick Bank). Runners-up for the highest default rates are Citibank and Providian at 29.99%.

    Eleven of the 21 banks with universal default policies are willing to reduce the higher rates if cardholders’ credit histories improve. Three more banks said it was "possible." Twelve of them said that after six months of improved credit, the rate might be adjusted downward — although not always to the original rate.

    We're not talking credit chop shops, here. These are major, respectable lenders in the consumer marketplace.

    An old [mostly accurate] forecast...

    from a largely-ignored diary about a year ago...

    How Bad Can It Get?

    I think the question should start with something we can wrap our imaginations around: How bad does it start?

    Let's use the above values as a range -- somewhere between 11% and 39% of cardholders will be at risk -- people who either always or sometimes pay the minimum.

    We could figure out a precise estimate, but let's just go with between 1% and 4% of all cardholders will default as a result of these changes, and another 1% to 4% will struggle on, incurring 30% default rates as a result of late and insufficient payments.

    No big deal, right?

    Um...no. And here's why.

    As of July 2005 credit card volume was at $651 billion for 2Q 2005.

    And per the Fed, Total US consumer debt a whopping $2,145.6 billion as of June 2005.

    So, what's 1%-4% of $2.1 trillion? Oh, just $20-80 billion in credit card defaults.

    Which would be covered by credit card companies significantly increasing the spread to prime that they charge the surviving debtors, which would both increase the vulnerability of same to falling under the default cloud, and decrease remaining cardholders' willingness to incur additional consumer debt.

    I seem to recall someone mentioning that rates were being jacked up this year, considerably more than can be explain by the non-movement in the Fed Rates?

    Well, there you have why.

  •  Payday Loans (2+ / 0-)
    Recommended by:
    CJnyc, kurt

    As ever, the One True Wiki's got something on the subject...

    Defenders of the higher interest rates note that payday loan processing costs do not differ much from their higher-principal, longer-term counterparts such as home mortgages. They argue that conventional interest rates at these lower dollar amounts and shorter terms would not be profitable. For example, a $100 one-week loan, at a 20% APR (compounded weekly) would generate only 38 cents of interest, which would fail to match loan processing costs.

    Answer: In which case, charge a flat fee, to discourage diseconomies of scale.

    A study by the FDIC Center for Financial Research found that “operating costs lie in the range of advance fees” [collected] and that, after subtracting fixed operating costs and “unusually high rate of default losses,” payday loans “may not necessarily yield extraordinary profits.”

    Question: What FDIC report was that, and when?

    Based on the annual reports of publicly traded payday loan companies, loan losses can average 15% or more of loan revenue. Underwriters of payday loans must also deal with people presenting fraudulent checks as security or making stop payments.

    Answer: Fine, then. Charge a 15% annualized premium over other operating costs and margin...and that's it. Hey, it's your numbers talking, not me.

    Now for the money shot:

    Payday loan makers also argue that the interest on a payday loan is less than the costs associated with bounced checks or late credit card payments. For example, bouncing a $100 check may inccur an NSF fee from the bank of $28 and a returned check fee of $25 from the merchant.

    In comparison, when expressed as APRs for two-week terms:

    $100 pawn loan with 20% service fee= 240% APR;
    $100 payday advance with $15 fee= 391% APR;
    $100 bounced check with $48 NSF/merchant fees = 1,251% APR;
    $100 credit card balance with $26 late fee = 678% APR;
    $100 utility bill with $50 late/reconnect fees = 1,304% APR.

    Which is a red herring, as payday lenders charge interest and fees, not just fees, which would create an economy of scale situation that would discourage borrowing $100 and encourage a lower frequency of larger-denomination loans.

    Also, the above comparison takes a payday advance ideal and sets it against punitive or distressed situations.

    What does that effective APR look like when you add late fees and whatnot?

    Ah...yeah. We're not getting the whole story, here.

    And neither are the soldiers who, short on scratch, walk in to get a small loan...just to get them through to the next payday.

    Bonus

    For FDIC guidance to examiners on regulation of payday lending, have at it.

    The Truth in Lending Act/Regulation Z section begins the real red meat: How to pulp these predators.

  •  Corruption seems to be A-OK with voters. (0+ / 0-)

    It's not a moral wedge issue anymore, unless it's a Democrat.

    Reading about the Abramoff crowd's access records to the White House, I was wondering... are the records released for ALL visitors, or just the named few?  If they list all visitors, I should hope the Democratic Party does some serious data mining.  Just how many people who were allowed access had no money mission? Bet it was darn close to zip.

    "It is, in other words, time for a national oil change. That is apparent to anyone who has looked at our national dipstick." - Al Gore

    by skwimmer on Thu Sep 21, 2006 at 06:25:35 AM PDT

  •  Um (0+ / 0-)

    I share your outrage, and appreciate your bringing this infuriating news to our attention, but: would it suffice, in your title, to refer to the "cold heart of the GOP"? Or, you might be more specific by replacing "black" with any of the following: cruel, evil, merciless, vicious, rapacious.

    After all, phrases like "black heart" and "yellow-bellied" have unfortunate connotations. In this sense, there is nothing at the heart of the GOP that relates to being black.

  •  Bible says... (3+ / 0-)
    Recommended by:
    lapin, kurt, Themistokles

    [reminder: Jesus hated hypocrites more than anything else]

    http://www.tentmaker.org/...

    SNIPPETS of Biblical Scripture on Usury:

    7 If he has not oppressed anyone, But has restored to the debtor his pledge; Has robbed no one by violence, But has given his bread to the hungry And covered the naked with clothing;
    8 If he has not exacted usury Nor taken any increase, But has withdrawn his hand from iniquity And executed true judgment between man and man;
    9 If he has walked in My statutes And kept My judgments faithfully -- He is just; He shall surely live!" Says the Lord GOD. (Ezekiel 18:7-9)

    ---------

    13 If he has exacted usury Or taken increase -- Shall he then live? He shall not live! If he has done any of these abominations, He shall surely die; His blood shall be upon him. (Ezekiel 18:13)

    See also:
    http://www.irregulartimes.com/...

    "Usury is strongly condemned in the Bible, more often than homosexuality is. It directly affects more people's lives. Userers are strongly represented in the Senate. They have corrupted our political representatives with much more money than gay rights organizations.

    So why isn't Trent Lott screaming about the evils of money-lending? Well, duh, Trent's fibbing to us. The Bible has nothing to do with his dislike of homosexuality. Instead, it's an excuse, a way to escape accountability for a strong personally-based dislike of an entire category of people."

    •  Usury (1+ / 0-)
      Recommended by:
      lapin

      Usury was considered a crime subject to universal condemnation for centuries from Biblical times until about 1980. At that time, financial interests, particularly those who preyed on the poor, took advantage of the 70's inflation to destroy nearly all usury limits throughout the United States. When I started the practice of law in 1977, legal loans at interest rates above 18% were very rare, although the different types of loans were subject to various arcane rules which allowed various maximum rates.
         Now we are in a time of relatively low inflation and there are no effective limitations on how much can be charged. It is an important issue that liberals just have missed out on. We need to put usury limitations back on the political agenda. Together with the bankruptcy "reform" act we have created inescapable traps for the financially unsophistocated.

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