Now we have Rep. Michael G. Oxley, the Ohio Republican, and Spencer Bachus, the Alabama Republican, aggressively siding with payday lenders those who charge interest rates of more than 400%, primarily to lower-income people.Were in the midst of the Enron scandal and the payoffs to Senators and Congressmen. In this environment it is especially embarrassing for representatives in Washington to be seen as operating in smoke-filled rooms on behalf of fat cats and against the common interest.
Thats basically what Oxley and Bachus are doing. They have been criticizing Comptroller of the Currency John D. Hawke Jr. who has a reputation for supporting the interests of big banks against those of the average American for actively discouraging banks from helping payday lenders skirt state laws. A handful of banks have been effectively renting out their bank charters to the payday lenders. National banks can disregard many consumer-protection laws of states outside their own.
You dont have to be a radical leftist to find Oxleys lobbying appalling. The rates charged by payday lenders would be breaking the consumer protection laws of numerous states, and they are using banks to evade them. This is regulatory overkill, and nothing less than another backdoor attempt to stop national banks from entering lawful agency relationships, Oxley writes to Treasury Secretary Paul ONeill.
And Bachus makes the ridiculous, but much-used argument, that the OCCs regulatory approach in this area risks shutting off a critical source of credit to consumers who have few, if any, alternatives in trying to meet their short-term financial needs. That was in a letter to Hawke. We suspect Bachus would make the same argument favoring the loan-sharking activities of the Mafia.
Indeed, even in this era of maximizing profits, few bankers have the stomach for this payday kind of business. It is especially inappropriate at a time when the country and our capitalist system is being rocked by scandal. Shame. Shame.
