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Anybody here know anything about Usury laws?

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flamin lib Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 01:21 PM
Original message
Anybody here know anything about Usury laws?
Someone posted about an on-line loan application that, in the disclaimer, noted a 177.4% interest rate over 10 months. I found one that has an annual rate of 531%.

https://www.checkngo.com/stateDisclosures/Texas/Finance... (Midwest).pdf

If I recall once upon a time far, far away there were laws the indexed consumer loan interest to the prime rate that banks use to loan money to each other. Any rate higher than that index was usury and the lender wound up in court if not in jail.

Am I nutz or have usury laws changed? In the '60s & '70s there were "loan shark" scandals here in Texas. 531% interest makes the Mafia look like wimps and Costra Nostra look like wusses. No wonder the mob got out of the kneecap breaking business.

It's a serious question; when did the law change and who was responsible?
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Stephanie Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 01:22 PM
Response to Original message
1. Your sell-out Democratic Senators, for one.
Look up the Bankruptcy Bill.
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flamin lib Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 01:48 PM
Response to Reply #1
5. I am WAY too familiar with the BK bill. I just got in under the
old law by filing electronically before midnight.

The laws governing lenders changed quite some time ago, I just can't remember when or who was in charge at the time.
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Strawman Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 01:24 PM
Response to Original message
2. I noticed an ad from one of those places today urging responsible borrowing
They must be scared. It's an obvious attempt to fend of real regulation with voluntary meaningless gestures.
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AlCzervik Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 01:25 PM
Response to Original message
3. if i remember right there used to be a cap of 18% on Credit cards but there was
a lawsuit--citibank i think and the cap went up.
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HiFructosePronSyrup Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 01:31 PM
Response to Original message
4. Yeah, Usury laws have been weakened an awful lot.
The major change is that it was ruled that credit card companies only have to obey the usury laws of where their home office is located. So the credit card companies set up offices in some little podunk town in minnesota, where they can control local government and fuck up the consumers.

If you want to do something about consumer debt, call for tougher usury laws.
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Wiley50 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 01:55 PM
Response to Original message
6. I have a Payday Loan for $300, the APR on the paper says 1047% n/t
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flamin lib Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 02:34 PM
Response to Reply #6
13. Care to share the lender's name? Here or in PM? nt
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Doc_Technical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 02:01 PM
Response to Original message
7. Check out this site.
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flamin lib Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 02:30 PM
Response to Reply #7
11. I'll check it out as soon as my computer finishes doing at least
two of the four things I've got it doing right now. R______e_____a______l s______l______o_____w r______i______g_______h_______t n______o_______w. ;-)
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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 02:03 PM
Response to Original message
8. The key court decision was in 1978 ...
... when the Supreme Court ruled in Marquette vs. First Omaha Services that it was legal for nationally chartered banks to export more costly terms of their cards to states where the laws regarding interest rates restricted such practices.

Usury laws were regarded as under a state's jurisdiction and states were able to regulate how banks and S&Ls and other financial instittuions, even those chartered federally or in another state, could do business within the state. Indeed, one could move from staate to stae and have the interest rates charged changed dramatically - as every card's disclosure contained extensive enumeration of the rates charged in each state.

Congress never stepped up to the task of capping rates. Banks have structured their busnesses (mazes of corporate entitites under conglomeration) in ways to comply with the SCOTUS decision - and thumb their noses at state regulators. The hypocrisy on the corporate right was clear ... among those who proclaimed "states' rights" as the Holy Grail of politics who then stood back and allowed the loopholes in federal laws to remain and permit state regulations become moot.

http://www.bankrate.com/brm/news/cc/19980202.asp

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flamin lib Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 02:27 PM
Response to Reply #8
10. Thank you. This looks like what I needed. I recall that in Houston
TX there was a huge scandal regarding S&Ls and deregulation and I think this case was the beginning.
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damntexdem Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 02:24 PM
Response to Original message
9. Yeah, those were quaint laws we used to have to protect consumers against rapacious lenders.
But now we instead protect rapacious lenders against hard-luck consumers.

Advice: if you owe any money, don't have the poor judgment of suffering from any major health problems.
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flamin lib Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 02:33 PM
Response to Reply #9
12. Advice is a little late.
My $70k job with benefits went to China 5 years ago so I financed a new business with credit cards. Did well the first two years, then the Real Estate market fell apart. Next thing I had to have $20k in dental work.

Color me Bankrupt---got in under the old law and have 18 payments left.
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EFerrari Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-16-07 02:35 PM
Response to Original message
14. Yeah. They are mostly not enforced. n/t
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