February 17, 2010
End of Wild West!
Assembly Representative Donna Seidel from Wausau is normally a sensible voice for Democrats in the Assembly, but these are not normal times. When the Assembly passed the weak regulation of payday loans, Seidel said this is the "end of Wild West" loans in Wisconsin. "It will end the debt trap for thousands."
She had a big hill to climb. First, the Speaker had changed his mind on regulation of the industry from pushing a cap on interest rates of 36 percent to no cap, saying the "cap went too far." We were relieved that his dating a lobbyist for the industry had no impact on the Speaker, but the industry prevailed--no cap on interest. Shame on the Democrats for not passing a bill Bob LaFollette would have been proud of.
Demonstration was a wake-up call. I never know how many people will show up on a cold day in February to protest a Supreme Court decision. I was pleasantly surprised yesterday that somewhere between 100 and 200 "mad as hell" citizens turned out on the Capitol steps to denounce the worst Court decision since Dred Scott. The notion of corporations as citizens is so nutty, all of us are scrambling for an answer. Good for the Wisconsin Democracy Campaign and Ben Manski for organizing the wake-up call to the state. This ruling is the death of democracy--it must be challenged and changed. (Memo to Evan Bayh: Now that you have run for the hills, do you have time to figure out how we can restore democracy?)
Saturday in Mazo. This Saturday, Nate Timm is hosting a mini-Bob Fest at Wisconsin Heights High School. Come and help us figure out our next step. It starts at 10 a.m.--see you there.
Carl--what happened? President Obama disappointed most of us again by announcing that he has caved to Republicans on nuclear power. He promised $8.33 billion in federal loan guarantees for two new reactors to be constructed in Georgia. Lindsey Graham said it is a "good first step." Robert Gibbs said, I kid you not, this "might not make everybody in the Democratic Party happy, but the announcement demonstrates to Republicans his willingness to be part of the dialog."
Peter Bradford, Vermont Law School professor and former member of the U.S. Nuclear Regulatory Commission said, "There are many cheaper ways to displace carbon, and there are many cheaper ways to provide for electric power supply." I was eager to read the Sierra Club denunciation. Instead I found that Carl Pope, Sierra Club executive director, also wants to be part of the Obama-Republican dialog. Catch this: "We are pleased Obama has reiterated the need for clean energy." Yikes! He is on our side?
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Hell, they could have put a cap of 100% in place and accomplished the same thing as a 36% cap. It simply would not have been enough for the operation to run. One place worked like this.
You borrow $200 for however many days are between now and your payday. The fee is fixed at $44. They simply adjust the APR to match the time frame. 500%, 900%, 1100% - whatever is necessary to get the interest payment up to their fee in the number of days you're going to have the money. If you have the cash for two weeks, the APR might be 500%. If you only have it for four days, maybe 1100%. One way or the other, you're paying $44 to borrow $200. Sick stuff really.
If they could only charge 100%, that would amount to roughly $5/week on a $200 loan, and that's not going to cover the overhead, collections and defaults. The whole sick industry would just have to fold up shop.
The problem is even if we did that - the reason these businesses were functional still remains. Enormous overdraft, NSF and credit card late fees - and plain, simple poverty.
If I'm going to get charged $35 from my bank and $50 from the merchent for one bounced check, suddenly $44 to borrow $200 doesn't sound so awful bad.
If I'm out of food a week from payday listening to my child cry from hunger, getting $100 worth of food sounds better than waiting a week to get $111 worth.
You seem to be suggesting that we kill off what is clearly a bad solution but nobody's doing anything about the problem.
-Jeff | Madison | February 18, 2010
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