Friday, January 31, 2014

What Do the Pope and Congressman Darrell Issa Have in Common - Not Much!


Pope Francis
How far does Pope Francis' social justice agenda go? Would you believe payday lending?

Well, not technically payday lending, but 'loansharking' (which many would say is six of one; half dozen of the other). But it is true, he's taking on those institutions which charge usurious fees that enslave borrowers under a mountain of debt. 

"The pope's comments at his general audience coincided with statistics issued on Wednesday by the country's tax police that showed they had seized some 168 million euros from loansharks in 2013, up some 1,250 percent over the previous year."

""When a family has nothing to eat, because it has to make payments to usurers, this is not Christian, it is not human," the pope said."

""This dramatic scourge in our society harms the inviolable dignity of the human person," he said, expressing his support for Italian groups who help families and businesses and who attended the audience."

"A number of Catholic associations in Italy help victims of loansharks. According Abele, a Catholic social services group, the illicit lenders are tied to organized crime and charge annual interest rates that can reach 1,500 percent in some cases. The annual rate is usually between 150 and 400 percent."

The pope's attitude toward such business practices makes it plain that his sympathies are with the borrowers and not with the lenders. Would to God that were true with the American politicians. Oh, to be sure, there are pockets of resistance where the government is fighting back. The New York attorney general, for instance, recently compelled a cluster of payday loan services to pay refunds and penalties to borrowers after it was discovered they were charging compound annual interest rates of 89 to 355 percent. That's a clear violation of New York's usury law, which sets the maximum interest rate for most loans at 16 percent.

According to reports, the payday services in question had made 18,000 loans since 2010 with a net value of $40 million.
U.S. Congressman Darrell Issa (R-CA)
But then there is U.S. Representatives Darrell Issa (R-CA) and Jim Jordan (R-OH) are fighting U.S. Attorney General Eric Holder over the justice departments investigation of big banks and their relationship to payday lenders.Operation Choke Point” is a massive investigation into whether banks help payday lenders illegally siphon billions of dollars from consumers’ checking accounts in exchange for a fee. Some banks, which offered loans of their own, recently announced they would get out of the payday lending business entirely to avoid a separate regulatory crackdown.
Mind you this industry in the U.S defrauds some 12 million Americans costing them billions of dollars a year in the same type of loans Pope Francis decries. In fact in America the average interest rates of between 138, 400 to 1200 percent.
Issa and Jordan's response? A January 8 letter to Holder saying in part, "The Department has consistently stated that its goal is to combat mass-market consumer fraud. However there is ample evidence that the true target of Operation Choke Point is the online lending industry, not actual frauders. Initial press reports of the Department’s investigations support such an understanding." The 'online lending industry' is, of course, online payday lenders.
From the Pope's righteous outrage at an industry practice that strips people of their dignity, to Darrell Issa's outrage that the U.S. Attorney General would dare seek to protect those same people is a greater ideological distance than from here to the Vatican...

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