Wednesday, October 22, 2014

Last Call For Prime Time For Subprime Again

Guess what's back in a big way, kids?  Our old friend, The Subprime Loan is running rampant, and thanks to Republicans, it's even easier for big banks to rack up the green with ridiculous interest rates. Being poor in America is very, very expensive.

Lenders have come under fire in Washington in recent years. Yet one corner of the financial industry — lending to people with poor credit scores — has found sympathetic audiences in many state capitals. 
Over the last two years, lawmakers in at least eight states have voted to increase the fees or the interest rates that lenders can charge on certain personal loans used by millions of borrowers with subpar credit. 
The overhaul of the state lending laws comes after a lobbying push by the consumer loan industry and a wave of campaign donations to state lawmakers. In North Carolina, for example, lenders and their lobbyists overcame unusually dogged opposition from military commanders, who two years earlier had warned that raising rates on loans could harm their troops. 
The lenders argued that interest rate caps had not kept pace with the increased costs of doing business, including running branches and hiring employees. Unless they can make an acceptable profit, the industry says, lenders will not be able to offer loans allowing people with damaged credit to pay for car repairs or medical bills. 
But a recent regulatory filing by one of the nation’s largest subprime consumer lenders, Citigroup’s OneMain Financial unit, shows that making personal loans to people on the financial margins can be a highly profitable business — even before state lending laws were changed. Last year, OneMain’s profit increased 31 percent from 2012
“There was simply no need to change the law,” said Rick Glazier, a North Carolina lawmaker, who opposed the industry’s effort to change the rate structure in his state. “It was one of the most brazen efforts by a special interest group to increase its own profits that I have ever seen.”

It's nice being able to charge 40% interest on a $4,000 loan, huh?  Most people would call that legalized loan sharking.  Let's keep in mind Republicans have done everything in their power to weaken the Consumer Financial Protection Bureau and at the state level, allow lenders free reign to gouge people.

Need that two grand to fix you car so you can still get to work and keep your job?  Be ready to fork over hundreds in interest payments, so much so that as with subprime and rent-to-own, you'll need to take out another loan to pay off the first one.

Blessed are the moneylenders, right?

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