Posted by Jim Hightower
When it comes to pursuing their prey, sharks are master maneuverers. Loan sharks, that is.
These days, this usurious species goes by the less threatening
name of "payday lenders." But they are no less voracious, targeting
folks in rough financial straits and luring them with easy-money
come-ons. With lethal interest rates of more than 700 percent, automatic
renewal clauses, and other razor-sharp gotchas, a $500 payday loan can
sink a hapless borrower thousands of dollars into debt. That's why
states have been restricting the sharks' interest-rate gouging and
entrapment techniques.
But, with a flip of their tails, many payday lenders are simply
swimming around state laws by operating online and offshore from such
regulatory safe-harbors as the Bahamas, the Isle of Man, and Malta. From
there, sharks can make loans, then begin devouring their borrowers'
bank accounts, even in states that ban such loans.
How can shady operators pull-off billions of dollars worth of
these devious – and maybe illegal – transactions each year? With inside
help from such pillars of the financial establishment as Bank of
America, JPMorgan Chase, and Wells Fargo. Of course, these upstanding
corporate citizens don't dirty their hands (or reputations) by making
these predatory loans, but they willingly allow offshore sharks to tap
directly into the borrowers' checking accounts and withdraw
unconscionable interest payments electronically… and mercilessly.
There's a four-letter F-word for what the banks are doing to
their own depositors: Fees. Automatic withdrawals by the sharks can
cause a tsunami of overdrafts in a borrowers' bank account – and banks
happily collect fat fees for every overdraft.
To help stop this multibillion-dollar feeding frenzy on hard-up people go to www.responsiblelending.org
"Major Banks Aid in Payday Loans Banned by States," The New York Times,
February 24, 2013.
"Short-term loans meet real, immediate needs," Austin American Statesman, March 7, 2013.
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