House Republicans are trying to delay a law that protects members of the military and their families from predatory lenders. This is an odd story involving shrewd political maneuvering, basic justice and decency, and the way those things sometimes work together and sometimes are at odds.
The specific policy in dispute here is a good, but odd, piece of legislation. Zach Carter summarizes it at the Huffington Post:
In 2006, Congress passed legislation imposing a 36 percent cap on interest rates for payday loans, auto title loans and tax refund anticipation loans to military families. Lenders responded by slightly tweaking the terms of their loans to avoid the limits. Since the law applied to payday loans with terms of 91 days or less, and amounts of $2,000 or less, credit companies were able to shirk the rules with 92-day loans, or loans of $2,001.
Big banks were even more creative, issuing “deposit advance products” – functionally almost identical to payday loans, but with a different name and with effective annual interest rates of around 300 percent. Congress responded to these tricks in 2012 by passing another law directing the Pentagon to fix these loopholes, and new rules were finalized in September of last year.
I like the original aims of this effort, and I appreciate the follow-up attempt to close the loopholes to ensure that it achieves those aims.
But at the same time, the protections against legal loan-sharking here are appallingly modest — 36 percent interest remains perfectly legal. And those protections are weirdly restricted, applying only to a single sub-set of the public: military families.
If it makes sense to protect military families from this kind of sleazy, coercive lending — and it does — then it shouldn’t make sense that such protection applies only to military families. But that’s politics. Proponents of these necessary, obvious consumer protections weren’t politically able to win such protections for everyone, so they took what they could get. Thanks to America’s veneration of all things military — a half-commendable, half-toxic impulse — it seemed politically impossible for the servants of big lenders to oppose such protections for military families.
This was a shrewd bit of political chess by opponents of predatory lending. Pushing for protections for sacrosanct military families didn’t just secure a partial, half-a-loaf victory resulting in greater justice for at least some citizens. It also forced the political servants of predatory lenders to paint themselves into a corner by adopting an incoherent, contradictory stance in which they have to explain why it’s unjust to prey on one kind of family but perfectly fine to prey on others.
Even so, the result is still … odd. It’s like passing a law that bars selling listeria-contaminated food to decorated combat veterans. Decorated combat veterans are rightly deserving of the public’s respect and gratitude, and nobody would dare say anything bad about them or dare oppose legislation designed to keep them safe from food poisoning. Such a bill would be guaranteed to pass, as no member of Congress would want to go on record as being in favor of poisoning decorated combat veterans.
That’s fine as far as it goes, but it doesn’t go nearly far enough. Members of Congress certainly should be opposed to the poisoning of decorated combat veterans, but they should also be opposed to the poisoning of anybody. Similarly, it’s encouraging that Congress believes military families shouldn’t become the debt-slaves of loan sharks. But it’s horrifyingly discouraging that Congress has no problem with loan sharks enslaving everyone else.
The political shrewdness of this narrow focus on military families prevents a frontal assault on these modest consumer protections — that’s why House Republicans are trying to delay these rules, not to repeal them. But it also shows, yet again, the limited effectiveness of such political maneuvers. As ever, flag-waving politicians paying lip service to “military families” or to “veterans” or to “the brave men and women of our armed forces” show their true colors once it comes down to a choice between those actual people and the vampires of Wall Street who want to feed on them.
Here, yet again, Congress is being forced to take sides between military families and the Banksters. Here, yet again, Congress is choosing the same side that it always does.
Ad-Free & Subscriber Log-In