Legalized Loan Sharking in Virginia

Virginia General Assembly Panel Facilitates Sharking!

Legal Charges equal to 391 Percent Interest Annually!!!

A story of personal financial tragedy.

In the past, we here at the Iconoclast have pretty much stayed away from the affairs down in Richmond at the General Assembly.

To be perfectly honest, there are a lot of great bloggers and mainstream media types out there who have the resources and who are very capable of dissecting the important issues and keeping those of you who are interested in such stuff well informed.

But now and again, something just jumps up to demand some comment.

Payday Lending! Wow!!!

I never personally had a pay-day loan; hope to God to never be in a situation where I might be tempted to get one; and pity the poor soul who lets the payday lenders get their razor sharp teeth into them to drag them down into the murky darkness of endless payday loans and staggering fees.

Notwithstanding the fine rhetoric from industry spokespersons and paid lobbyists claiming that payday loans are a legitimate “service” to society, these payday loans are little more than legalized loan sharking taking shameless advantage of pathetic people who are typically too ignorant to realize the danger and hopelessness of the practice until it is too late.

Loan sharking has been around since ancient times. In early times it was called ursury. Their are many religious texts condemning

Payday Lending lobbyist Reginald Jones suggests that the typical payday borrower does so to “avoid a bounced check, late charges or to pay an unexpected bill.”

Think about this for a second folks!

Does anyone really think loan charges equal to 391 percent annualized interest is a better choice than “late charges”? Maybe if your other line of credit is with the Mafia and the "late charges" involve cement overshoes! But otherwise, it is hard to imagine how a 391 percent interest rate could help anyone.

Mr. Jones also suggests that payday loans are justified as some kind of viable option for people who have no other choices like bank loans, credit cards, relatives, churches or pawn shops. He suggests that payday loans serve a legitimate consumer need.

Maybe there is some truth to this… like a drug-addict “needs” drugs; like an alcoholic “needs” the booze; and like I sometimes “need” that extra cheeseburger.

Please give us a break here. Payday loans is more like throwing a boat anchor to a drowning man and yelling “catch!” One could argue that it lessens the anguish of the drowning victim by taking him down faster and deeper.

Right...

Of course, people who get them selves into financial problems and find them selves doing business with these cold blooded predators are not always blameless. These people often got themselves into a financial bind all by them selves. Lacking self discipline? Typically yes. Ignorant of the fundamentals of finance (and usually basic arithmetic)? Yes, again. Personally irresponsible? Yes, yes, yes. These people typically have problems! There are also probably some exceptions out there who may have gotten themselves into a financial mess through circumstances beyond their control. It happens.

So just because many of these people are lacking self discipline, ignorant of finance, and personally irresponsible does this mean that Payday loan consumers deserve to be further submerged into a hopeless cycle of outrageously abusive lending charges?

According to some of our Virginia lawmakers the answer seems to be “Yes”.

As bad as the Payday lenders are themselves for such abusive lending practices, we here at the Iconoclast are more outraged at the political leadership in the Virginia General Assembly who seemingly have sold out the victims of this legalized loan sharking practice and who are trying to convince the public that they are going to “reform” the abusive practice.

One of the ringleaders for saving the Pay-day lenders’ “bread and butter” seems to be Virginia Senator Richard L. Saslaw who along with 10 other members of the Commerce and Labor Committee recently voted (11 to 4) to reject a consumer supported drive to repeal the current Virginia pay-day loan laws and to substitute an industry supported so called “reform” bill.

Senator Saslaw's approach to reform comes in the form of Senate Bill 1014.

However, the so called “reform” bill still still seems to leave in place loan charges equal to 391 percent annualized interest.

It is not to hard to figure out why the pay-day lenders would support such “reform” is it?!!!

But one wonders why on earth would the Senator Saslaw and his colleagues on the Senate Commerce and Labor Committee consider it reform leaving in place such a fundamentally abusive problem?

The answer might be found in Jeff Schapiro's recent reporting on the subject.

With reformers like Senator Saslaw in key positions in the Virginia General Assembly, I guess we all best start praying to God that we never find ourselves swiming in the shark infested waters of Virginia.

Catch!!!


Disclaimer: Payday lending is perfectly legal in Virginia thanks to the laws passed by the Virginia General Assembly. Morally reprehensible, but perfectly legal.