Civil Rights Groups Defending Predatory Lenders: Priceless

[rayofreason]

At the end of June, as the subprime mortgage crisis was driving the economy into a tailspin, Charles Steele Jr., the president of the Southern Christian Leadership Conference (SCLC), took to the op-ed page of the Washington Post to decry the devastating effect the meltdown was having on minority homeowners. But rather than support currently pending measures to better regulate the credit markets, the leader of one of the nation's oldest civil rights groups instead attacked them. Steele was particularly upset about a Federal Reserve proposal that would crack down on subprime credit cards—high-interest cards marketed to people with bad credit.

Steele rose to the card issuers' defense, invoking his group's founder, Martin Luther King Jr., and claiming that any move to regulate the cards would deny minorities access to much-needed credit. (In July, after another op-ed piece on a similar topic appeared under Steele's byline in a a handful of papers, he claimed he didn't write it or authorize its release; according to Steele's lawyer, a Washington public relations and lobbying firm was behind the commentary.) The argument was an odd one coming from a civil rights group. Most consumer groups believe that the subprime industry is largely predatory, and rife with abuses that disproportionately affect minorities. But Steele's op-ed makes a lot more sense when you consider a detail the Post at first left out: In August 2007, the SCLC formed a partnership with CompuCredit, a subprime credit card issuer and payday lending company. (The Post later updated its story to reflect this.) The deal included plans for an affinity card that would put the famous civil rights group's name on CompuCredit Visa cards and joint "economic empowerment" workshops around the country to help educate minorities about credit. When Steele announced the deal last year, he said, "Consistent with SCLC's historic commitment to civil rights and economic justice, this partnership represents a critical part of our campaign for economic empowerment."
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Read the rest at http://www.motherjones.com/washington_dispatch/2008/08/compucredit-cfsa-payday-loans-core-sclc-civil-rights.html

Be prepared to be outraged.

[sui generis]

1. craziness

Here's the deal.

You give someone a credit card. You give them a relatively small balance limit, say 2000 dollars.

You charge them 6% interest until they pay their gas bill one day late. Then you charge them 30% interest. At 30% they can't make minimum payments on their card anymore, and all their other revolving accounts jump up to 30% too so all of a suddent they're living paycheck to paycheck with zero disposable cash to reduce those balances. And the credit card companies whine. They MADE that bed, they need to suffer for it.

This isn't about denying credit to minorities. This needs to be about undoing global default and about establishing REALISTIC limits to what userous lending means. I remember as a tyke hearing about a "loan shark" that charged 15% interest on cash loan and how awful that was . . . and now we don't even blink at 38 and 40%, and call it "legal".

The crooks have won - subprime credit is highly organized crime.

[rayofreason]

3. Might as well...

...hold a convention for gambling addicts in a casino, or an AA convention in a distillery.

Not that poor people are money addicts, but one of the persistent features of poverty is a lack of financial competence.

[Recursion]

2. Economic empowerment through payday loans?

Sorry, Charlie: the path to economic empowerment involves running the scum who provide payday loans out of business, bulldozing their storefronts, and salting the earth there. Not working with them.