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Attorneys general warn against federal payday loan regulation

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A bill in Congress that would extend federal regulation to the payday lending industry would pre-empt state laws and undermine consumer safeguards, Indiana Attorney General Greg Zoeller warned in a letter signed by 40 attorneys general.

Zoeller warned House and Senate leaders in both parties against adoption of HR 6139, the Consumer Credit Access, Innovation and Modernization Act. The bill proposes to issue federal charters to payday lenders who would be required to operate within regulations set forth in the bill. The proposal is before the House Committee on Financial Services.

“It’s critical for states to both preserve consumers’ access to alternative forms of credit and retain the ability to take quick action against short-term lenders that prey on those already in financial distress,” Zoeller said in a statement issued Friday. “This joint effort among attorneys general underscores the importance of killing this federal legislation that would provide no significant protections for consumers and have unintended consequences.”

Under Indiana law, payday lenders who make small loans in a range of about $50 to $500, typically with repayment terms of two weeks, may charge annual percentage rates of as much as 391 percent. Consumer advocates say the practice is predatory and forces most cash-strapped borrowers into a cycle of costly, frequent borrowing.

The proposed federal regulation would, among other things:

  •     Create National Consumer Credit Corporation charters that would be non-depository institutions;
  •     Forbid loans of less than 30 days;
  •     Offer extended payment options for loans of less than 120 days.

But Zoeller said the bill lacks specific standards and would let lenders sidestep more stringent state regulations. He said the proposal also would exempt loans with terms of one year or less from the disclosure requirements of the Truth in Lending Act and substitute a cost metric.
 
Also signing the letter were attorneys general from Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Guam, Hawaii, Idaho, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Vermont, Washington, West Virginia, Wisconsin and Wyoming.
 


 

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  • nicodemus writes
    Thanks Bryan actually I am not brave like Paul or you but rather a Nicodemus. But just like the authors of federalist papers I'm going to exercise my own right to write under pseudonym in spite of the chilling effects a-blowing.
  • hat tip
    JOhn, I hold you in very high regard, thanks for sharing your thoughts. I hope we can continue to meet here even after you join the likes of me and Ogden for being a fearless dissident who is unwilling to say that 2+2=5.
  • Vix pervenit
    Bryan, fascinating story from your public service. I appreciate your experience and am mindful of the man sound reasons bureaucrats should not be involved in setting prices. And in a way interest is the price of credit. I have read Road to Serfdom by Hayek and argued laissez faire so much in my past that I'm ashamed of it now with that added "life experience" I lacked when younger. Life experience has taught me that "just because there are foothills does not mean there aren't mountains." Ie, just because it is hard to tell if 18% is too much for bad credit risk doesn't mean that it's hard to tell that 100% plus is usury for anybody. The point is that super bad credit risk person has no business borrowing money at all. The state does have a legit role in protecting them from themselves just as it does in many other areas of human life. As for your last remark, I do not agree that our system of private enterprise requires usury. I would point to the well functioning economies of various Muslim nations that, based upon religious law, specifically forbid the charging of compound interest ("riba") as "haraam." And yet they are able to accomplish both large scale public finance and also small scale consumer lending. So no I respectfully reject your assertion on those empirical grounds. And we don't need to resort to Sharia for inspiration. Aquinas is a source for so much of Western thought it would be hard to say where his influence begins or ends. Likewise in continental economies there were centuries of successful social commerce without modern free market laissez faire capitalism, though not surprisingly it would seem that usury was at least partly legalized by old Henry VIII. Yet there remain efforts to limit the harm. Such as the loan sharking statute http://www.law.cornell.edu/uscode/text/18/892 Many liberterians would repeal that law as well. I have thrown Ayn Rand over-board and now I am sticking with PLato and Aristotle and Aquinas on this one.
    • Here is an expert on the subject
      "For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still." -John Maynard Keynes
    • Here is an expert on the subject
      "For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still." -John Maynard Keynes
    • Nanny State?
      John, thank you, you are better educated than me as to this discussion. But I may have you on experience, since I headed up the Kansas Consumer Protection Division 2003 - 07. The payday loan folks lobbied us for a blessing, which we did not give. Some who worked for me wanted, much like you, to issue the opposite, and our division had fought them prior to my arrival. We also had many complaints from consumers alleging the rates they were paying to constitute usury. After reflection and real world experience, I came to the question of who was I to decide that 18% was acceptable, but 19% usury? Or was it 22%? Who was I too say? Just becuase I had access to the AG's signet ring? Did not work for me, AND .... is not our entire system built on usury, that is lending of $$$ at a profit for time run? If we ended all usury, absolutely defined, would our post modern, post capitalist economies even function.
      • usury is not a social good
        bryan, my source for teaching on the social evil of usury include both pagan Greek philosophers and St Thomas Aquinas. As you doubt know they came long before Pat Robertson. One need not be a Catholic to appreciate this. Even in Protestant England and Waspish America, for centuries there were laws against usury. Likewise Marxists have had a lot to say about usury too. The evils of usury are plain for all to see. As for the markets. They are not human they are mathematical constructs which aggregate human marketplace choices. They are not going to be the "invisible hand" that does anything especially good nor especially bad. That is a pretense of Adam Smith and his cronies. The market price for anything is just a point on a graph. It shows what a buyer and seller of X will both agree upon for a trade of X. That is all. markets represent price decisions and there are markets for social evils as much as social goods; markets for the illegal as well as the legal. Legislators are called upon to consider the social good which is definitely more complicated than GNP. Economically anti usury laws function by setting a price ceiling on credit. That has the certain effect of cutting off credit for those who are bad credit risks. That is a SOCIAL GOOD NOT A SOCIAL EVIL. Contemporary loan sharks should not be allowed to "give people enough rope to hang themselves with." That should go for big banks in the subprime credit card market just as much as payday lenders or car loan outfits that will sell and repo the same car over and over and over again for enough down payment. But especially it should go for the big banks. The failure to recognize what is usury is part of what got us into the whole 2007 mess. The failure to understand usury is behind the LIBOR scandal, the overinflation of the currency by the Fed Reserve, and a whole host of deriavative social ills that were not in previous generations possible prior to the US supreme court judicial fiat unilaterally striking down well functioning state laws against usury which were perfectly constitutional, and the Fed Res System putting the pressure on everyone to 'Liberalize" lending restrictions. Glass Steagal act: was it not a fine piece of Rooseveltian legislation? I can think of a lot of things they did in that era which I dont like but Glass Steagal was a gem of that era.
      • Trust the market?
        John Smith, if we cannot trust the market to regulate the worth of capital in its most liquid form, what can we trust it to do? I say just make sure all terms are clearly and unambigiously disclosed and let the market lend money. Christians can still denounce and still avoid, but this should not be given the theological solution you crave. You are not a Pat Robertson theonomist, now are you? ;)
        • usury is bad for society. make it illegal. learn from history!
          Greek philosophers, the Laws of Moses, and Chrsitian saints alike considered usury a sin and social evil. And yet, US sup ct blackrobes decided in the 1980s that state anti usury laws would be struck down as impediments to commerce. The Greenspan and liberterians and global-bankers jumped into the subprime loan business with both feet and it ended up in 2007's meltdown. Today there is precious little corrective action having been taken and the usurious money-lenders who would previously have been called loan sharks blather on about free markets and all this other excuses for their rackets. This ought to be illegal and rein in the pawnbrokers too while you're at it. USed to be republicans had some knowledge of Christian social ethics and were willing to put it into law-- now they're all brainwashed by Rand, Greenspan, Freidman, et al. the same crowd that backed Pinochet and lead us to ruin in 2007. Pathetic. You have to get a Marxist to talk sense sometimes. Crazy times these. Its not clear to me where Zoeller is really coming down on this. I think he is a swell AG. But instead of mouthing misplaced federalism and states rights and libertarian apologia, he ought to look back at the conservative Christian and Roman Catholic social traditions in America and England and Europe that for centuries forbade usury for the good of society. Republicans need to step up and act for the good of society not just banks and moneylenders.
        • Pay Day Loan
          If you are facing a financial lurch, and you need a short term loan that are very quick and great rates too, you should not hesitate visiting pay-day-loan.co.za, the right place for getting pay day loans at the right time and affordable rates as well.
        • Attorneys general warn against federal payday loan regulation
          This joint effort among attorneys general underscores the importance of killing this federal legislation..... Regards, Bizworldusa
        • Payday Loans
          The feds need to keep their noses out of state business like the constitution states!

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        1. This guy sounds like the classic molester/manipulator.

        2. Louis D. Brandeis was born in 1856. At 9 years of age it would have been 1865. The Brandeis family did not own slaves. My source Louis D. Brandeis: A Life, by Melvin L. Urofsky.

        3. My name is Matthew Lucas Major, I recently went through a jury trial in Bloomington , In. It was the week of Feb 19-21. Although I have been incarcerated since August 5, 2014. The reason I 'am writing to you sir is on the 21 of February the jury came in with a very excessive and wrongful verdict of guilty on 6 child molesting charges against my daughter who was 9 at the time I was accused. I also had 2 other Felonies one of Intimidation and 1 of Sexual Vicarious Gratification. Judge Marc Kellam on the second day of trial gave me a not guilty on those 2 felonies. The jury was sent out during that time and when brought back Judge Kellam told them to not concern themselves with the 2 Felonies that he ruled on them. They were told to not let evidence they had already heard influence there verdicts. I never in my life touched any child sexually and definitely not with my own daughter. When I was arrested Detective Shawn Karr told me I would be convicted guilty just on my daughters word even without evidence. That's just what happened. my public defender did me so wrong he never once proved to the court and jury all the lies the child told, and Jeremy Noel my public defender could of proven the lies easily. The stories in Serenity's depositions and Forensic interview changed and were not consistent as Prosecutor Darcie Fawcett claimed they were. Yet my attorney never mentioned that. The facts that the child accused me of full penetration in her vagina and rectum was proven lies. Doctor Roberta Hibbard of Riley hospital in Indianapolis confirmed Serenity's hymen intact, no scars, no tearing, no signs of rape to her. Yet my attorney didn't use that knowledge . the DNA was all in my favor. I tell you I will spend my entire life in prison going through rape and beatings etc. even Judge Kellam abused his authority by telling the jurors to listen and believe what the prosecutors side in evidence like my daughters testimony. In one interview with the detectives my daughter got flustered with her mom and said on camera " I'm saying what you told me to mom"!! Yet Mr. Noel said nor did anything to even resemble a defense attorney. Judge Kellam allowed edited version of a taped conversation between the child and her mother. Also Judge Kellam allowed the Prosecutor too bring in to my case a knife found under my seat, the knife wasn't part of my case. She was allowed by my attorney and the judge to put a huge picture of it on the screen and huge picture of my naked privates in a full courtroom and open court. Ms. Fawcett says to jury see how easy Mr. Major could reach the knife and cut his Childs throat. Even though I had no weapons charge against these cases. This gave the jurors prejudice thought against me thinking I threatened her with that knife and how scared she would of been knowing i could get it and kill her. On my sentencing court March 19, 2014 my public defender told Judge Kellam he wish to resign from being my attorney and wished for the court to give me outside council to file a error to trial or appeal. We were denied. Now after openly knowing my public defender don't want to represent me he has to. Well when as parents we make our kids clean a room when they really don't wish to, well the child will but don't mean she will do a good job, that's where I'm at with Mr. Noel. please dont ignore mine and my families pleas for your help . we have all the legal proof you could need to prove Im innocent. Please dont make my spend years in prison innocent when you can fix this wrong. Im not saying Im a perfect man or that I was a perfect dad to my 2 children none of us are. Ive made some bad choices in life and I paid for them. But I didnt ever touch or rape my daughter . I love my children with all my heart. And now through needing attention and a ex-wife who told my granny several times she wish she could put me in prison to get me out of their lives. Well my ex finally accomplished her goal. Sad part is she is destroying our daughter with all this horrific lies and things she taught my daughter to say. My daughter will need therapist to ever hope for a chance of a normal life after what she had done to her by her mom and their side of the family. My daughter told everyone even on stand she had a dream months before i supposedly molested her in this dream I was molesting her and when I finally did it matched her dream perfectly. She admitted to watching movies about little girls being molested and watching U-Tube videos about child molesting all before it happened supposedly to her. Doesn't that sound very unusual that a non molested 9 yr old would need to know so much about being molested? The only reason I could think a 9 year old would need so much information is to be prepared to know what to say and be able to say how it felt what took place etc.. So when questioned by authorities she would be prepared. And there again sir if a parent is pre grooming a 9 year old child she would need intimate details . Like telling her daughter about a couple moles on my private area. The child admitted to sneaking my cell and looking many many times at nudes of me and my girlfriend even one where my penis was entering my girlfriends vagina. In that picture my moles are obvious. Yet when prosecutor showed everyone in court my privates and pictures of the moles she said the only way the child would know about them is if she saw them for herself. My attorney once again said nothing about the pictures my child saw. Or could a ex-wife be able to describe my moles to help her case against getting rid of me? I beg you help me. This is my very existence. Ive lost everything , a good job, a wonderful girlfriend, my freedom, but worse thing Ive lost is my children. They were my reason to get up every morning and strive to be better. The wonderful bond I had with my Serenity is gone. After this I would be afraid to even hug her for fear of what next can they do to me. I'm not afraid to tell you I sit here in this cell and try to hold back my tears. Everyone knows you cant show weakness in prison. My life has already been threatened here at Wabash Valley Prison. After only 3 days of arrival. I was tricked into signing a waiver now Im in G Block General Population with 6 child molesting felony charges. Mrs. Hart as a 18 year old I almost died hooked to machines in hospital almost 1 month and now I know that fear was childish compared to this . I cant help but put emotions in this, after all Mrs. Hart Im human and God help Me I never been more afraid in my life. I didnt hurt my little girl I didnt touch her sexually. As much as it shreds me and fills my mind what Im facing I worry more about my mom and granny because of their great love for me mam they are suffering so deeply. I aint done this things but my loved ones suffering right along beside me and If you take my case you will be in essence freeing them also. I sent momma this letter and asked her to email it to you. I'm scared I have been done so unjustly by our legal system and I need you to fix this and give me freedom. I ask you please don't just ignore my pleas. Here in America its nice to be able to trust our legal justice system, well they destroyed my and my loved ones trust in our justice system . And I'm trusting in You !!! My entire family is suffering this nightmare with me. My 77 year old granny had a stroke and isn't doing so well. My single mother that raised 3 kids alone is dying from Lupus and since my arrest has stayed so sick and weary. Our lives torn to peices by a government I was taught I could trust in. my momma has tried so many innocent project and wrongfully accused and cant get anywhere. please please help me. A quote from the late Nelson Mandela: To be free is not merely to cast off ones chains, But to live in a way that respects and enhances The Freedom Of Others. I have Faith in you and your clinic to cast my chains off and give me freedom I do deserve as a wrongfully accused Man, son, brother, father, friend. Matthew Major DOC# 246179 Cause # : 53c02-1308-FA-000779 God Bless you. Please contact me with your decision so I know you made a life changing decision for me , just please at least write me so I know you care enough about your citizens to respond to cries for your help. You can speak openly with my mother Charlotte Spain (828) 476-0406: 71 Lakeview Dr. Canton, NC 28716 Thank You Matthew Major I know yall get thousands of request and inmates claiming innocence, and each person who are innocent deserve to have organizations like yours willing to fight for them and I give yall so much Thanks and I thank God everyday yall are out there caring enough to help free the innocents. Since discovering firsthand how easily lives and families can be destroyed by Poor Defense attorneys not doing their job . And Prosecutors allowed to do as they please in court

        4. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

        5. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

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