Good for Attorney General Paul Morrison for convening a roundtable discussion on payday loans and predatory lending. The roundtable will be headed by Holly Petraeus, who helped get Congress to cap payday loans to military personnel at 36 percent annual interest. She is the wife of Lt. Gen. David Petraeus, the new commander in Iraq. As Morrison noted, payday loans can have effective annual interest rates as high as 400 percent and can trap vulnerable Kansans in cycles of debt. His and Petraeus’ involvement in this issue is most welcome.
Posted by Phillip Brownlee
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22 Comments
This is what I love about America, there will always be people out there to take advantage of people’s situation to make a buck, but what the hell, that’s Capitalism with a capital C.
Problem with these payday loans and predatory lenders is that they are often operating in Kansas but are headquartered in another state where the usury rates are higher than in the state where they are operating, in Kansas the legal rate of interest is 10%; the general usury limit is 15%.
Neighboring states are as follows:COLORADO, the legal rate of interest is 8%; the general usury limit is 45%.NEBRASKA, the legal rate of interest is 6%; the general usury limit is 16%.MISSOURI, the legal and judgment rate of interest is 9%.Corporations do not have a usury defense. (Remember that a corporation set up for the purpose of loaning money to an individual will violate the usury laws.)OKLAHOMA, the legal rate of interest is 6%. Consumer loans may not exceed 10% unless the person is licensed to make consumer loans.
All this said a Payday lender based in Colorado or Missouri operating a franchise in Kansas can charge interest based on where they are headquartered legally by the law, the laws need to be changed to require Payday lenders to base their usury rate on what state they are operating.
Regarding the predatory lending to soldiers, you look at businesses such as Omni Military loans, hire retired senior military personnel to work for their business on commission, these same retired personnel who would have counseled their soldiers for living beyond their means when they were on active duty now prey on the same soldiers.
Richard you hit the nail on the head. It is ok for the Military to be a predator on the military but look out for the private sector doing the same.
If we are going to put laws into place to protect people from themselves then we need to broaden the picture here. There should be a limit on the number of credit cards a person can have as well as a limit on the amount they are allowed to charge on those credit cards. There should also be limits on the amount of interest and finance charges a credit card company can charge anyone individual in a year.
Then you should take a look at the car dealers in Kansas. They should not be allowed to sell a person a car that they cannot afford. The car dealers are sneaky little people. They draw a person into their dealership with a promise of no interest, low payments and no money down. Then once the person goes in they do not realize that the no interest is actually built into the price they are paying, the low payments extend your car loan out so far that by the time you pay it off you are ready for another care and the no money down is also built into the price you will pay.
Then you have to look at the lenders of home mortgages. Kansas is on the high side for the number of people that lose their homes because they got in over their heads. They get loans with no money down and pay over the acutual appraised value and borrow above the appraised value. Then you have different types of loans. You could have a lone that you only pay interest on (so you will never own your home because you have not paid anything on the principal), then you have the loans with balloon payments (you will owe all of it at one time in a few years), then there is the fluctuating interest rate (so you never know what it will be) and there are other creative ways that people are hood winked into borrowing money for a home without really understanding what the consequences will be in the future.
Then there is the home equity loan, the second mortgage loan etc. etc.
So where do you stop? How does government legislate responsibility? Is government the see all and be all for all of us? Should be just hand our lives, money and children over to the government so that they can protect us from ourselves or better yet they would be able to make sure that all of us were on a level economic level. Then you would not have anyone with more money than the next person. Government would create and determine what business would provide jobs for all of us. We would not have to think for ourselves or do for ourselves. There would be no rich people (except for government) and no poor people. You would not have to worry about making choices on what you eat, drive or wear. Heck you might not even have to work because the government would supply everything for you.
Now where government would find the money is still a mystery but that would not be our problem. We would be saved from ourselves and others as well.
What a minute. NEWS FLASH JUST IN!!!! They had such a life and it was controlled by the COMMUNIST.
Morrison’s job is to enforce the law not make the law. Why is he creating an expensive task force when the legislature is taking a look at this issue?
Usury laws are a creation of long-ago, to prevent a kind of “indentured servitude” by people being unable to ever fully repay a loan. In fact, the Racketeer Influenced and Corrupt Organizations act (RICO) specifically prohibits an entity from charging interest at more than twice the local usury rate, and then attempting to collect on the debt. Ergo, it’s illegal to “loan shark” at 30% interest in Kansas, but it’s perfectly okay to “Payday Loan” at 400% interest? Sotheysaid, we’re not talking about passing out Chairman Mao’s book and wearing grey broadcloth uniforms. What we’re talking about is investigating the fact that the corporate world has been able to legitimize a practice on a grand scale which was illegal by itself when the Mafia did it.
Sounds like Morrison has his own political agenda. Wow oh wow, is he doing a great job protecting us from ourselves. What’s next, maybe we have to wear hemets in our cars. Go Paul go!
If creditors make it so easy for vulnerable people to borrow money that many can’t afford to pay back, then make it a lot easier for those people to take out bankrupcy. The lenders will police themselves when they end up on the losing end once too often.
richard is right. you can pass laws in kansas that will close payday loan companies in kansas, all that will do is take them off the street corners so they won’t be “in your face”. those with bank charters can still do payday loans at higher rates through the internet or advertise in the yellow pages.a 36% cap on interest%? that is $3.00 for a $100.00 loan, and there is a 50% chance the person will default within the first three loans. that is a fact. you can’t even pick your customer’s with that rate, as a credit report costs a minimum of $10.00. that is why Loan Companies operating in Kansas, such as Household Finance and others that are restricted by this 36% interest cap have a minimum loan of $1,000, with collateral required.if you want to reduce the payday loan lenders in Kansas (not eliminate them, reduce them), then put a reasonable cap on the title loan companies and go back to the old rate for payday loan companies ($15.00 first hundred, 6% plus $5.00 after that), I guarantee the large national companies will leave within a year, if not sooner. cap it at 3%, and all will close, and you will have a bunch of consumers that can’t pay any bills that will have to declare bankruptcy.
PayDay Loans. Loan Sharking 101 is all it is.
My brother-in-law used to gleefully explain how he would get people to turn over the same loan many times until it was about ten deep. In other words, they couldn’t pay back the first loan, so got a second loan to pay back the first. The subsequent loan was at a higher interest rate. So and so forth, until they are so far in the bucket they can’t get out.
Yeah, there probably needs to be a cap on interest rates of this kind. But it won’t help the people who won’t help themselves.
They will just go to another loan place and double it up to pay off previous loans.
If you suddenly made heroin legal, would it then be a fine thing for society and cause no problems?
How about allowing and even encouraging athletes to take steroids and growth hormones?
Eliminate the speed limits and let people drive as fast as they want?
No.
Same with legalizing usuary. There are good reasons for keeping it illegal.
About the only good thing it did was replace the knee-capping illegal Shylocks with the legal less violent ones.
But it’s still bad for our society and we as a society should be able to protect ourselves from it, as much as possible.
Funny thing about these payday loan companies…..the interest rate or payback fee on a loan is $15 per $100 borrowed. Alot of people actually take these loans out to cover NSF fees that they will be receiving from their banks due to not having the funds in the bank to cover checks they’ve written. If you look at it this way, it is cheaper for them to take out a payday loan than to let their check go thru as NSF and then get $29 NSF fees from their bank, and then the NSF fee for where they wrote the check to. So let’s see…the interest fee on $29 NSF fees from a bank if they have a check that would bounce every 2 weeks would be how much interest?? And the payday loan companies are the bad guys?? I don’t think so!
Gotta agree with Sotheysaid…where does it stop? Will the government tell us how much we can spend on a car? Will the government regulate credit card debt? Will the government mandate a savings account?
It is not the job of government to protect all citizens from all ills at all times. It is especially not the job of the government to protect people from making poor choices.
The problem, all you free market types, is that payday loans shops were set up to be bottom feeders – their targets are people tansitioning off of welfare and or non-English speakers who have little money and status with traditional banks.
It is hard for me to see that I am better off because unethical business folk can fleece poor people.
MARY, I agree.These lenders, like pawnshops,know that their clients are drug addicts, alcoholics, low IQ families, and other vulnerable ner’do wells.
Are these owners the jackasses that wanna be respected ‘businessmen’?Pshah.The whole damned ‘industry’ is nothing more than legal thuggery.
Looks like Paul Morrison has launched his campaign for Governor.
The story not mentioned here is that Morrison is starting what Kline’s office failed to do for its years in office. The obscene failure of Kline’s term was comsumor protection. I forget the guy’s name (repression is a wonderful defense mechanism), who was the head of that division, collected far less in fines than any prior KS AG’s office. His attitude was that consumers were only there to fleece businesses and that consumer protection was a nanny-government hindrence to legitmate business practices.
Morrison promised a change of course in this part of the office. These actions suggests he meant what he said.
I know Paul Morrison and if he runs for governor, I will be first line voting for him.
Nice seeing someone do the job they were elected to do, instead of their personal crusade.
How nice that Brownlee has taken over as Morrison’s PR flak. He even gets Brownlee’s services free now that he is protecting liberalism’s high priest of death and the provider of their unholy sacrament of abortion.
Steven Davis wrote:The problem, all you free market types, is that payday loans shops were set up to be bottom feeders – their targets are people transitioning off of welfare and or non-English speakers who have little money and status with traditional banks.
It is hard for me to see that I am better off because unethical business folk can fleece poor people.
The problem with all of you socialist regulations types is that you absolve the debtor of all responsibilty.
It is not difficult to manage your credit and most lenders are ready and willing to make accomodations for borrowers who fall on hard times.
Most lenders are not predatory jut like most borrowers are not mentally incompentent.
If the person signing the document does not read the fine print, it is on them.
DON’T SIGN SOMETHING YOU DON’T UNDERSTAND!
I don’t see how empowering the government to interfer any further into the financial affairs of Americans is of any benefit to me.
well, obviously tracy doesn’t know what she is talking about. as a payday lender and pawnshop”thug”, i can tell you that customers have decent jobs, are not the dregs of society. some are police officers, some are government workers, some work the aircraft industry. they encompass the full gamut. sorry tracy, but you should try talking out the correct end.
“The problem with all of you socialist regulations types is that you absolve the debtor of all responsibilty.
“It is not difficult to manage your credit and most lenders are ready and willing to make accomodations for borrowers who fall on hard times.
“Most lenders are not predatory jut like most borrowers are not mentally incompentent.
“If the person signing the document does not read the fine print, it is on them.”
I AM SO GLAD THAT ASSHOLES LIKE YOU SO GENEROUSLY MAKE MY POINT!
Thank you very much…Steven Davis
actually you are wrong, steve.people who have “little money orstatus with traditional banks” can’t get payday loans as they don’t generally have checking accounts. banks won’t lend people $100. they can’t afford to at $$3.00 per hundred. no one can.you can have Jesus Christ co-sign with you but they can’t afford to lend you that amount of money at that interest rate. there is no place to borrow the low amounts of money we are talking about ($100-$500) at the capped rate they want to impose. i hear a lot of bitching, moaning and complaining, and a lot of finger pointing, but i don’t see any of u rushing out there to loan strangers $100. for a $3.00 return and a good chance the check will bounce. if u are willing to do that, please let us know.