Shark the troops

ACORN has a new ally in the battle against predatory lending: the Pentagon.

Paul Fain reports in Mother Jones:

Military leaders are starting to wage a war on the home front, and the enemy is right outside the gates of some of the nation's largest bases. There, amid the fast-food joints and the tattoo parlors, are the payday loan offices with neon signs that offer instant cash and easy money. Soldiers and sailors, often struggling to make ends meet, go in for a quick short-term loan, unaware of exorbitant interest rates — typically 390 percent annually — that can lead into a cycle of debt. …

Steve Tripoli, the author of a National Consumer Law Center report on financial schemes that target military personnel, says that payday lenders depend on customers who have jobs and bank accounts but are just getting by. Sailors and soldiers fit the profile perfectly, he adds, noting that they also face military discipline for unpaid debts.

Industry officials deny that they prey on military personnel, saying that only 2 percent of their customers are active-duty military. But that figure is nearly four times the percentage of active-duty military in the total population. And [Navy Capt. John E. Cohoon Jr.] is sure that the industry is singling out enlisted men and women for special attention. "Military personnel," he says, "are ripe targets for consumer predators."

This is promising.

Payday lenders can swindle most working-class Americans without much fear of public condemnation. But exploiting soldiers and sailors during wartime is another matter.

Many Americans are glibly willing to accept the idea that others' poverty results mainly from "bad choices" (as though the poor lived in a world brimming with options). But America's enlisted personnel are exempt from these popular mythologies about the "deserving poor." By preying on members of the military, therefore, the legal loansharks have provided a toehold for those who oppose their exploitative industry.

Payday lenders have been able to operate largely because they are perceived as ripping off only poor urban black people and poor rural white people. As long as that is the perception, it will be nearly impossible to assemble enough political will to put a stop to them. But if they become perceived as ripping off a population that enjoys more public sympathy — "the troops" — that political will then becomes easier to find.

This is unfortunate. It's not how the world ought to be and it does not speak highly of our national character. I wish it were otherwise. I wish we had enough of a sense of solidarity — of "liberty and justice for all" — tht the exploitation of any group of Americans would arouse the wrath of the public.

But the sad truth is we don't live in such a world. Most Americans — and the lawmakers who represent them — don't give a rat's ass if predatory lenders exploit working-class black people. But they can be made to care about the fact that predatory lenders are also ripping off America's enlisted personnel.

Thus we have an opening. We have an opportunity to wrap ourselves in the unassailable flag and to go after payday lenders in defense of motherhood, apple pie and The American Soldier. In doing so, we may be able to secure legal protections that will defend other working Americans as well.

  • Rick B

    I was shocked a few years ago when I learned that a pawnshop loan in Texas has a $15 up front fee and then runs 1/2% per day. That is 180% a year plus the $15.
    That was before the payday loans. Borrow $100, write a check for $118 due whenever the next payday is, but no more than two weeks. At its best that is 9% per week or 468% a year – not counting fees which they do add in.
    Then read “Perfectly Legal” by David Cay Johnston about how the tax system has been skewed to literally give money to the wealthy, and how use of a private corporate jet by the CEO to fly to Florida for golf will cost at most a few hundred dollars per person but costs the corporation something like $3200 per flight. Not to worry, though, since the corporation can deduct that from its taxes, meaning the taxpayer picks up 35%.
    The US has become the nation of the reverse Robin Hood. Steal from the poor to give to the rich.
    Read the book. If it doesn’t infuriate you, then you are too wealthy to be worth a shit anyway. And if you aren’t that wealthy, you are being robbed.

  • http://www.washingtonmonthly.com/archives/individual/2004_05/003868.php Political Animal

    Loan Sharks

    LOAN SHARKS….I don’t care what libertarians say, the payday loan industry is a blight on a supposedly civilized nation. Today, Slacktivist tells us there’s a promising new argument to persuade legislatures to put these moral cretins out of business: …

  • mark

    Is it my fault that they are willing to pay 468% interest? Pay them more. But that would cost more for the military and that would raise taxes to pay for it. Is it my fault that they can’t get by on what they are paid because maybe they “need” the latest DVD or “need” to have the latest gadgit or “need” to have the latest cell phone? NO it is their fault for not making their ends meet. I make my ends meet and have a wife that does not work and have three kids. I am not a millionaire and don’t make tons of money but seem to take resposibility for my life and my decisions. Why is it always society’s responsibility to “take care” of the poor and/or stupid. When will people take responsibility for their own actions and stop balming everyone else? As for the rich always getting the deductions for “expenses” and the tax payers picking up the 35% ….the rich do pay MOST of the taxes in this country. By the way how much mortgage interest did you deduct last year? What kind of goverment student aid did your you or kids get for college? Why sould the “tax payers” pick up the tab for that? Don’t forget that WE are the tax payers and that WE pick up the tab for everything the government spends. Protect my borders, build my roads and get out of my life.

  • Kevin Carson

    “Many Americans are glibly willing to accept the idea that others’ poverty results mainly from ‘bad choices’ (as though the poor lived in a world brimming with options).”
    This quote is key to the issue. The problem is not the lack of regulation for payday loan services. The problem is the existence of government regulations that prohibit self-organized credit for workers, and thus enable capitalist bankers to draw monopoly profits because of the lack of competition.
    As Lysander Spooner pointed out over a century ago, usury laws and other regulations of unsecured loans will only make LESS credit available to the destitute.
    Usury is indeed a problem. But it is the result of too much, not too little, State intervention.
    The solution is not more regulations, but an end to the regulations that currently allow lenders to charge a monopoly price for access to capital. Legal tender laws, capitalization requirements, and other market entry barriers keep interest artificially high.
    Imagine, as an alternative, if it were legal for any group of private individuals with marketable property to form a mutual bank, and issue banknotes with that property as collateral.
    That’s exactly the function performed by an existing bank when you mortgage your property; they aren’t actually “lending” anything, but only performing the no-risk service of monetizing your property. But because of the State’s intervention to artificially limit the number of “lenders,” they can charge a monopoly price for the service (just as is the case with capitalisation requirements for life insurance, which permit monopoly premiums far above what is required by actuarial statistics).
    Without such entry barriers, if private citizens were freely able to form banking cooperatives to monetize their own assets, competition would bring the price of such secured “loans” down to the cost of administration and overhead–something less than 1% interest.
    Although there would still be a risk premium on credit card debt and other unsecured loans, competition from mutual banks would lower the interest to an actual risk premium–not the monopoly rates of 18% or 25% we have today.
    Imagine a society where labor had free access to capital through its own voluntary association, and much less credit card “debt slavery” existed as an incentive to hold onto degrading jobs at any cost. What would the bargaining power of labor be, in such a genuine free market?
    As Benjamin Tucker wrote, the natural wage of labor in a free market is its own product. State intervention is not necessary to bring that about; all that is required is an end to all the forms of legal privilege and monopoly by which labor is forced to work for less than its product.

  • blunted

    mark says: “Is it my fault that they are willing to pay 468% interest? Pay them more. But that would cost more for the military and that would raise taxes to pay for it. Is it my fault that they can’t get by on what they are paid because maybe they “need” the latest DVD or “need” to have the latest gadgit or “need” to have the latest cell phone? NO it is their fault for not making their ends meet.”
    I call “bullshit”, mark, followed by a hearty “go fuck yourself” (sorry for the language, slack).
    I can immediately think of two situations in which desperate needs create desperate measures: health care & vehicle repairs. You can’t go to work sick and you can’t go to work if you don’t have transportation. If you can’t go to work, you can’t make money, and you could possibly lose your job. If you don’t have another option available to you (i.e. borrowing from family or friends, which usually isn’t a viable option… most people on the lower end of the economic spectrum have friends & family who are in the same boat), then what other choice do you have?
    Your example of the loan recipient getting it because they need a DVD or a “gadgit” [sic] is an equally steaming load. The majority of people getting payday loans and receiving the subsequent interest rate raping certainly aren’t doing it for pleasure.
    I find it very interesting that your solution is “pay them more”, but then quickly retracted because your greedy ass doesn’t want to pay more taxes. What’s your solution? Privatize the military? Fuck off.

  • john b

    What’s your solution? Privatize the military? Fuck off.
    Yer man Bush has already done the former. Hopefully he’ll do the latter soon as well…

  • Nancy Lebovitz

    Why don’t the banks do short-term loans at better rates? Is there a legal barrier?
    For that matter, people who are “only” paying 25% on their credit cards should be competing with those loan sharks.

  • http://www.bluntedonreality.com/archives/000080.html blunted on reality

    Jumping the Loan Shark

    Slacktivist brings our attention to an article in Mother Jones that offers promising news about the future of the payday loan industry: Military leaders are starting to wage a war on the home front, and the enemy is right outside the gates of some of t…

  • mark

    “The majority of people getting payday loans and receiving the subsequent interest rate raping certainly aren’t doing it for pleasure.” They aren’t doing it for pleasure because they did everything else first. “My man Bush???” When did I say I liked Bush? I don’t and I hate Kerry even more. I agree the banks suck. We gave them control when we went off the true gold standard. Bring that back and you will see 0 inflation and contol of the monitary system out of the hands of people.
    PAY MORE TAXES WHY??? I already pay too much. You pay more and see how you like it.
    BTW Great use of the english language.

  • Amanda

    I don’t know why people won’t take responsibility for their actions and stop “balming” everyone else, mark. But it would be nice if they owned up to it and realized that “making a living” is not a good enough reason to duck responsibility for taking advantage of the desperate and poor.
    Oh wait, I’m sorry. I keep forgetting the only people who owe the world “responsibility” are the poor. The rich can do whatever they want and they don’t owe anyone shit.

  • Homer the Troll

    “The rich can do whatever they want and they don’t owe anyone shit.”
    What the fuck are you talking about? The rich pay for fucking everything in this country. They “owe everyone shit” to the tune of more than 50% of their earnings. Then the government gets what’s left when they die.
    There is no good reason an E-1 should be getting a payday loan. It’s not much, but the military does pay enough for you to take care of your needs. Higher than E-1 or E-2 and there really is no excuse. The real problem is that we don’t teach financial management in school.

  • Bridgier

    Well, at least Homer is up front about his taxonomy.

  • MannyJ

    Thanks for proving me wrong, Mark. If there’s one thing I thought everybody agreed on — Bush ran on it, and Kerry has been screaming about it for decades — it’s that we don’t pay high enough wages & benefits to the military. Would it interest you to know that a lot of soldiers are broke because they have to pay for lodging for their families that used to be provided as a matter of course, not because they want DVDs?
    Mark, NOBODY is trying to raise your taxes. So chill. From the way you describe your situation, Kerry wants to raise taxes on people doing a lot better than you. And you’re wrong, the rich are not paying any 50%, because most of their income comes from capital gains. And frankly, to judge by the crap in the Hammacher-Schlemmer catalog, they have more money than they know what to do with at this point.
    As for the free banking thing — we tried that. We got bank panics every 20 years . We gave up. Just once, I’d like to see a conservative acknowledge that there was a reason we changed things in the first place.

  • Buhallin

    I spent a decade in the USAF, so I’m going to guess I have more experience with the viability of the military pay system than Mark.
    I was single, living off base (we didn’t have enough housing to do otherwise) and barely got by. This is in San Antonio, one of the lower cost-of-living places around. When I separated as an E-5 I was taking home $24,000 a year. Most of the time I was in, our annual raises were in the range of 2.X% – yes, during the Clinton years, but it was a Republican-controlled Congress that passed it. Why doesn’t anyone talk about that when they talk about the Republican support for our military??
    I did not know a single airman (E-4 or below) with a wife and child who was not working an extra job. Many military enlisted with two kids qualify for food stamps.
    For single enlisted, the pay and benefits are arguably enough, as long as you just live on base and play very, very tight. Of course, that’s what leads to dorm parties and alcoholics, but they’s their fault, right?
    Payday loans sucked, but they were necessary, and safe – one of the few good things about the military is that you KNOW the paycheck will be there. It makes such loans very, very attractive, and you never look at the percentage, only the flat numbers. $18 isn’t so much, right?
    I’m happy to pay taxes. I don’t LIKE it any more than anyone else, but I’m terribly fond of things like roads and fire departments and such. My issue with taxes has everything to do with how they are (mis-)used, and the loopholes that now mean someone who takes home $30,000,000 a year may pay 2% in taxes, compared to my 27%.
    I’m happy to pay the salaries for those people who are still in. Wartime or no, REMF or no, the military life is not easy or plush, and I dare you to tell a first-term airman that your extra $100 a year in taxes isn’t worth him getting a pay raise that keeps up with inflation.

  • Buhallin

    Minor followup on the “responsibility for one’s own actions” thread:
    In order to keep Mark’s taxes down, the military underpays people. It cuts benefits and treats people like crap. As such, they’re now undermanned.
    It’s a little-known fact that military people HAVE no rights. My enlistment contract was involuntarily extended by more than 6 months after 9/11, which caused me to lose a $68K/year job I had lined up.
    Now, because of manpower shortages, more and more of our men and women are being hit with the same situation. The military calls it “Stop-Loss”. Personally, I call it slavery, but I’m still bitter about the job.
    If Mark and others like him weren’t quite so greedy, and we paid and treated as they deserve, maybe some of those who are so broke would have been able to move on to better jobs.
    And don’t we all have some personal responsibility for our own protection? The military provides a shield that we cannot ourselves, and we must all expect to contribute to that. I guess paying them enough to support their families shouldn’t be a necessary part of that?
    Where’s YOUR personal responsibility, Mark?

  • mark

    Where’s my personal resposibility? First to God then to me and my family then to others.
    Like I have said before…Protect my borders, build my roads and get out of my life. If the government would do that we could all pay just 2%.
    BTW I have a wife(stay at home mom) and 3 kids a house 4 cars a 4 family rental property and take 6-8 weeks vacation a year…al on $60,000 per year living in central NJ. I think I know what it is to “play tight”. I also take all the deductions that I am allowed by law.
    As for BUSH and KERRY…they are both crooks.

  • blunted

    “Like I have said before…Protect my borders, build my roads and get out of my life.”
    Mark certainly doesn’t subscribe to the “ask not what your country can do for you…” point of view. Boortz listener, Mark?
    Buhallin, thanks for your comments about surviving on military pay. Regarding what you said about Republican support of the military, it’s all lip service. They love to talk up the troops, but when it comes to actually doing anything for them, that’s a different story. Remember how the Pentagon wanted to cut imminent danger & family seperation pay? Of course, media attention and public outcry forced them to reverse that decision quick-fast. This administration raises the military’s budget by billions of dollars, then complains that $25M a month to pay the troops a little additional money for being in battle is a “strain on the budget”.

  • Kevin Carson

    Um, Manny? I’m not a “conservative.” I’m an individualist anarchist. That’s a kind of free market *socialist*, in case you didn’t know. I’d have thought the references to “monopoly profits” and “capitalist bankers” might have tipped you off.
    The main beneficiaries of government intervention in the economy are capitalists and landlords. The central role in formulating New Deal policies, for example, was played by CEOs like Gerard Swope of GE, along with an army of investment bankers and corporate lawyers. Their chief motive was to cartelize the economy in the interests of big business. Check out any of the New Left histories of corporate liberalism (e.g., Gabriel Kolko, James Weinstein, and William Appleman Williams) along with sociologists of the “power elite” school like G. William Domhoff. “We” didn’t change things–our friendly ruling class did.
    And no, free banking hasn’t been tried. There has NEVER been a time when the federal and state governments did not regulate banking so as to artificially restrict the supply of credit and enable usurers to obtain a monopoly return on it. Central banking did not replace “free banking”; it was one kind of statist monopoly replacing another.
    Capitalism has been statist since its very beginnings; there has never been a time when the state did not intervene to force labor to sell itself in a buyers market, and pay part of its product as tribute to the owners of capital and land. William Greene and Benjamin Tucker wrote of the state-enforced money monopoly as a central bulwark of capitalist exploitation back in the nineteenth century–you know, that allegedly “laissez-faire” era they love to talk about.

  • Buhallin

    “Like I have said before…Protect my borders, build my roads and get out of my life.”
    Roads… Borders… Fire department… Police… Courts and judges… Deposit insurance… Education financial aid… Scientific grant money…
    It’s all amazingly relative though, isn’t it? I pay more taxes than you do, Mark. Why? I have no children, no dependents. You’re all for “Don’t take my money”, but I’d be willing to bet you aren’t arguing to level the playing field for people like me. You’re proud that you take all the deductions you get. What makes you more deserving of government subsidies (and that’s what tax deductions are – government subsidies) than I am? If we took away all your deductions, I’d pay less taxes than I do now. How are you any less of a leech on me than you think someone forced to live on welfare is to you?
    Blunted: That’s one of the things that turns my stomach about the solid military support for Republicans. Nobody looks at Congress when they cut our pay, they blame Clinton. For some reason, nobody holds Bush and Co up for cutting veterans’ benefits, or changing the rules and taking away promised care for WWII veterans.
    I spent a decade working next to contractors, and in many cases training them to do the same job I did, but I made a third what they did. We had two types of programmers I knew: Those separating, and those enduring a last enlistment until they made retirement. We were hemhorraging technical talent at an insane rate, because we couldn’t compete.
    I consider myself lucky, honestly. When I separated I nearly tripled my gross paycheck, and was able to go to work for a company developing software for VA hospitals. I’m making what the market says I’m worth, I’m getting treated like I’m worth something and not just a bag of flesh, and I have the satisfaction of contributing to the well-being of those who endured what I did, and then some.
    I can’t imagine a happier life. Well, okay, maybe when we’re near deadlines and I’m in the middle of finals and have a hard time seeing straight I’m so tired… But generally, I’m pleased with where I am.

  • mark

    Hey buha
    “It’s all amazingly relative though, isn’t it? I pay more taxes than you do, Mark. Why? I have no children, no dependents. You’re all for “Don’t take my money”, but I’d be willing to bet you aren’t arguing to level the playing field for people like me. You’re proud that you take all the deductions you get. What makes you more deserving of government subsidies (and that’s what tax deductions are – government subsidies) than I am? If we took away all your deductions, I’d pay less taxes than I do now. How are you any less of a leech on me than you think someone forced to live on welfare is to you?”
    I am don’t youy hear it. LESS government = LESS taxes for all. You take all you can get too. I will take them if they give them.

  • Buhallin

    Yet there will always be taxes, however lessened they may be. Once we hit that minimal point, will you then argue for equality between us? That we should pay the same taxes based on income, regardless of which of us has more kids? You’re arguing for me to pay less, but you aren’t arguing for equality.
    I’m not saying that you shouldn’t take the deductions, or that I don’t, but doing so makes your whole “They shouldn’t get nuthin’!” line a bit hypocritical. We generally decide that helping low-income people is a good cause, and provide welfare. We decide that kids are expensive, so we give parents a break. The end result is the same – more money to certain types of people. Whether it’s direct welfare or lesser taxes, the end result is the same. Every time you use an interstate, it’s more of my money than yours.
    Finally… I’m impressed that you manage a family of 6 on one income. I’m curious what you do for a living, but that’s neither here nor there.
    Take your same situation, cut the income in half, throw in frequent deployments lasting anywhere from a week to four+ months (or, lately, 16 months), in a contract you can’t get out of and a whole SLEW of other restrictions.
    Deal with all that, then you can talk about how our military people are overpaid. I’m impressed that you manage as you do, but you’ve got NOTHING on what our military folks deal with.

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