Tuesday, July 11, 2006

Going after the legal loansharks

Economic ignorance is a huge byproduct of our educational system's lack of math focus. A sad byproduct is that you can easily find the nearest military base by tracking the PayDay loan bloodsuckers. At long last, someone is taking notice. From NavyTimes;
...the Senate passed an amendment that would cap the annual percentage rate payday lenders can charge troops and their spouses at 36 percent. A similar provision is being considered in the House.... Some payday lenders charge annual interest rates of more than 800 percent.

Three-fourths of military personnel believe the government should limit the interest rates lenders can charge, even if that means fewer people can qualify for loans, according to the survey.

The response to that question from those who have used payday loans, 74 percent, was almost the same as from those who had not, 75 percent.

The study also found that “only a small fraction — fewer than 13 percent of military enlisted personnel — have had a payday loan in the last year.”

Eighty-five percent of the people said they were given information on the annual percentage rate they would pay when they took out their loan. But 64 percent said they did not know what interest rate they were paying on their loan.

And about 30 percent said they needed the money from their last payday loan to cover their bills.
military users are twice as likely as the general population to use payday loans,” said Jean Ann Fox, director of consumer protection for the Consumer Federation of America.

The usage rate of 13 percent among service members over a year’s time is still nearly twice the rate of payday loan usage found in the general community — 6.75 percent, said Keith Ernst, senior policy counsel for the Center for Responsible Lending, a national nonprofit group affiliated with Self-Help, a community development financial institution.

“We can have faith that it’s actually higher than 13 percent,” Ernst said. “Surveys tend to underreport, because people tend to not want to talk about” being a payday borrower.
IMAO, going after these folks is a classic case of looking after your Sailors. A fair number of Navy leadership knows this, and are expending some of their positional capital to go after this. Bravo Zulu to these officers. One of the first was now retired CAPT Anderson in 1999-2000 time frame, but there are more keeping the fight going here and CAPT Patton here.

One funny note is that the story is based on a research project that says there is no problems; I will let the below speak for itself.
But claims that payday lenders target military personnel and that payday loans are a threat to readiness appear “unfounded,” say two professors who just completed the study on payday lending among enlisted troops.
Their research was sponsored by the nonprofit Consumer Credit Research Foundation, which is funded by financial institutions that include payday lenders.

No comments: