Predator Creditors

Short-term “payday loans,” which charge high interest rates for quick cash, are flourishing in 39 states.

And, naturally, screwing the less-fortunate.

Mr. Milford is chronically broke because each month, in what he calls “my ritual,” he travels 30 miles to Gallup and visits 16 storefront money-lending shops. Mr. Milford, who is 59 and receives a civil service pension and veteran’s disability benefits, doles out some $1,500 monthly to the lenders just to cover the interest on what he had intended several years ago to be short-term “payday loans.”

So what is the gubmit doing about it?

Efforts to regulate the industry in New Mexico bogged down this year. Lenders hired lobbyists to push for mild rules, and consumer advocates were split between those who wanted to virtually shut down the industry and others, including Gov. Bill Richardson, who promoted rules like mandatory reporting of loans, limits on fees and rollovers, and an option for borrowers to convert loans to longer-term installment plans.

Last summer, after legislation failed, Mr. Richardson issued regulations along those lines, but a court declared them illegal. The state has appealed.

OK. This is somewhat understandable. There is apparently no policy in place to confront the lenders and restrict their predatory practices, meaning that the messy process of crafting legislation to do so must proceed in its normal, slow, manner. You can't expect change overnight.

But here's what I don't understand:

In one indication of how common the problems are, his restaurant alone gets 10 to 15 calls each day from payday lenders trying to collect overdue fees from his workers, Mr. Richards said. At any one time, under court order, he must garnishee the wages of about a dozen of his workers to repay such lenders.

When did the courts start working for the credit mafia? How widespread is the practice of wage-garnishing and what institutions can make use of it? I know wage garnishing is applicable in cases of child-support, although I don't know how efficient it is or under what conditions it works. And I suppose there is some provision for garnishing wages in the case of back taxes, but I don't know for sure. But I don't think Citibank can have your wages garnished for not paying your credit card bill. So, I wonder what law it is that allows or requires the courts, in New Mexico or elsewhere, to act on behalf of these "payday lenders"?

If I can get all political scientific about it, this is an illustration of what I posted about here, regarding theories of pluralism and elitism. Elitist theories contend that the essence of politics and policymaking is the ability of certain interests to set the rules of the game, and to prevent demands for action--such as is the case with victims of predatory lenders--from being considered by public institutions, be it the legislature or the executive. Pluralist theories hold that policy outcomes are a reflection of the balance of interests arrayed on any one issue, and that access to the political system is essentially free and open.

Pluralist theories also recognize the difficulty of political change, not because access to the political system is impeded, but because change generally only occurs in the cases when the policy or political equilibrium undergirding the system itself changes.

In this case, at least at the state level, the current rules of the game favor the merchants of usury.

Speaking of which, usury is un-Biblical. Where are the Christianists on this?