New Orleans Every time we think we might be surprised at the avarice of major financial institutions, we are reminded that in the real world, there are no limits either to greed or the willingness for banks to rip off anyone available including preying on desperate, poor families. More sickening evidence was available in a story in the Times on how big time banks are trying to exploit loopholes in consumer protections and the regulations covering payday lenders by stealing from the poor.
The hammer hit the nail early in the story:
An increasing number of the nation’s large banks — U.S. Bank, Regions Financial and Wells Fargo among them — are aggressively courting low-income customers alike … with alternative products that can carry high fees. They are rapidly expanding these offerings partly because the products were largely untouched by recent financial regulations, and also to recoup the billions in lost income from recent limits on debit and credit card fees.
The story carried a picture of a fellow who had borrowed $1000 to pay for medicine for his cystic fibrosis where he paid $100 in fees and stands to pay even more if he’s late on payments. If that doesn’t make you want to do something between weeping and pull down a wall with your bare hands, then there is just plain something wrong with you, and please immediately see someone for that.
The loophole is that legislation regulating payday lenders does not apply to the big boys, so they are trying to grab what others can no longer touch. Payday lending has been a huge campaign for ACORN Canada, so this leads me scurrying back to make sure we didn’t leave this backdoor unlocked in the Great North. Spokespeople for the newly organized Consumer Financial Protection Bureau were reportedly looking to see if any of this was out of whack, but I’m afraid that will be a vain search.
It goes without saying that some banks won’t think twice about steering lower income customers towards more expensive products. Can you say “subprime mortgage loans!”
Many of these scalawags charge costly fees for transactions on “prepaid” cards. These are cards loaded by the holder with cash money so there is NO RISK.
There ought to be a law but there probably won’t be one at the federal level. In some place maybe a state might be willing to shut the loophole. In other it will simply be another sad, tragic example of business as usual which in cases like these ought to have the same criminal penalties as grand theft robbery has.