The term “predatory lending” has a specific legal definition. It also has a common-sense definition that fits some of the recent practices of a Georgia company in almost every particular.
The feds have just hit TMX Finance, the Savannah-based parent company of, among other short-term lending outfits, TitleMax, with a $9 million fine for “luring consumers into costly loan renewals by presenting them with misleading information about the deals’ terms and costs.”
That’s bad enough, but the usurious rates charged by some of these payday- and pawn-loan businesses are fairly well known already — though not, sad to say, well known enough.
The fine was levied by the Consumer Financial Protection Bureau, an agency that falls under the Office of the Inspector General of the Federal Reserve. In its complaint, the CFPB said TitleMax, whose loans can carry annual interest rates of as high as 300 percent, “lured consumers into more expensive loans with information that hid the true costs of the deal,” according to agency Director Richard Cordray.
Then there’s the adding-insult-to-injury factor. The company used what the CFPB called “unacceptable and illegal” practices to collect late payments by sending agents to customers’ homes, workplaces and, in some cases, the people cited as references on the loan applications: "[TitleMax] employees disclosed the existence of consumers’ past-due debts to third parties, including neighbors, roommates, family members, supervisors and co-workers,” the consent order stipulates.
A financial penalty for a financial organization is appropriate, if not necessarily adequate. Laws were broken; surely part of the justice process should be identifying and punishing those who made the decisions to break them.
One of the most shameless accountability dodges in Alabama politics was the practice of politicians transferring money from one political action committee to another, and another, and another. It was political money laundering that for years served many a special interest, and absolutely no public interest.
It was a cheat at both ends: Donors who contributed money in good faith to this candidate, or for this cause, never knew by whom, or for what, their money would ultimately be used. And of course the voters had no way of knowing what interests were backing what candidates.
The legislature finally got around to banning this abysmal practice. The Alabama Democratic Conference challenged the ban on First Amendment grounds — perhaps the feeblest “money is speech” rationalization yet.
On Tuesday Alabama Attorney General Luther Strange announced that the 11th U.S. Circuit Court of Appeals wasn’t buying it. The state’s law was drawn finely enough, the court ruled, that it protected transparency without violating free speech.
The PAC-to-PAC transfer dodge was a scourge on Alabama politics for too long. Here’s hoping this court ruling marks the end of it.