WE THE PEOPLE ARE NOT GOING TO SIMPLY FORGET THE TENS OF TRILLIONS OF DOLLARS IN FRAUDS FROM THE 2008 ECONOMIC CRASH AS WE HEAD INTO THE NEXT MASSIVE BOND MARKET FRAUD AND COLLAPSE.
I want to move on to the growing dark side of banking----predatory check cashing and movement of most towards being UNBANKED. First, I want to shout out to our religious leaders embracing the soaring USURY, WALL STREET FRAUD AND THE GOVERNMENT CORRUPTION driven by development corporations in our US cities. The world heard of the banking scandal below simply because a REAL PIOUS butler to a Pope Benedict felt the need to be honest. We learned of numerous money-laundering schemes the one bringing down Pope Benedict being the laundering of Wall Street fraud from NYC by the arch-bishop of NY to the Vatican Bank.....billions of dollars coming to the Vatican with some being moved on to Israel.
THE VATICAN BANK WAS SIMPLY ACTING LIKE A WALL STREET BANK.
As this article shows, no one was found guilty---the money never recovered---and the same threats of closing a failed bank were never done. So, with today's global Wall Street fraud of our subprimed US Treasuries and state municipal bonds---we KNOW our religious institutions are STILL profiting from all this.
AS USUAL ----THE ONLY ONE IN JAIL IS THE BUTLER COMING FORWARD TO REPORT LYING, CHEATING, AND STEALING.
Vatican bank granted reprieve by Pope Francis after series of scandals
Vatican announces reform plan after months of investigation and speculation that bank will be closed
Pope Benedict launched a cleanup of the Vatican bank before he resigned last year.
Monday 7 April 2014 10.44 EDT Last modified on Monday 7 April 2014 11.27 EDT
The Vatican bank is to stay in business despite speculation Pope Francis might close down the scandal-plagued institution.
The same system exists here as it does in US Wall Street banks never reformed.
'The IOR was entangled in the collapse 30 years ago of Banco Ambrosiano, with its lurid allegations about money-laundering, freemasons, mafiosi and the mysterious death of Ambrosiano chairman Roberto Calvi - “God’s banker”'.
Cleaning Up the Vatican
By PAUL VALLELYJUNE 13, 2014 New York Times
LONDON — It looked extremely dramatic when Pope Francis fired the entire board of the Vatican’s financial watchdog last week. But that was only the half of it. The seismic changes that are underway behind the scenes in Rome are even more radical than public appearances suggest. And they offer illuminating insights into the steely character of the man who likes to present himself to the world as a model of smiling humility.
The body known as Rome’s Financial Information Authority (F.I.A.) supervises everything from the Vatican Bank to the real estate of the Holy See, its staff salaries and even the Vatican pharmacy. Its five Italian members were due to serve until 2016 when Francis asked them to resign early — to be replaced by an international team of financial experts that includes Joseph Yuvaraj Pillay, the man who turned around the Singapore economy, and Juan Zarate, a former financial security adviser to President George W. Bush.
The drastic move came after months of infighting between the old guard and the F.I.A.’s director, René Brülhart, a Swiss anti-money-laundering expert, charged with cleaning up one of the world’s most secretive banks, which has assets worth more than $8 billion. A former head of Liechtenstein’s financial intelligence unit, he found his reforms continually frustrated by an old-boy network. He complained to the pope, who swept aside the obstacle in a single move.
But there was more to it than that, as anyone would have suspected who knew the modus operandi of Jorge Mario Bergoglio when he was archbishop of Buenos Aires before he became pope. There, too, he had faced a banking scandal in which his predecessor, Cardinal Antonio Quarracino, had become embroiled in underwriting a multimillion dollar insurance deal for a family of prominent bankers who turned out to be paying all his credit card bills. When the bank went insolvent, bankers were jailed, and the Catholic Church was asked to repay huge sums it did not have, Cardinal Bergoglio called in the international accountants Arthur Andersen, closed the church bank and transferred its assets to commercial banks.
He acted swiftly, decisively and transparently — on several levels at once. And that is what he has been doing for the past year with the opaque finances of the Vatican and its scandal-mired bank.
He certainly needs to do so. The bank has had a highly dubious history since the 1980s when it was implicated in the collapse of Italy’s largest private bank, the Banco Ambrosiano, whose chairman, Roberto Calvi, was found hanging from Blackfriars Bridge in London, an incident that was widely seen as a murder disguised as suicide. A warrant was issued for the arrest of the president of the Vatican Bank, Archbishop Paul Marcinkus, alleging he was an accessory to fraudulent bankruptcy, but he was never put on trial.
The bank’s checkered history has continued until recent times. In a 2012 report, the Council of Europe’s monetary authority failed the Vatican Bank on seven of its 16 core anti-money-laundering regulations. Other banks distanced themselves from it to such an extent that in 2013 Deutsche Bank closed down the Vatican’s 80 cash machines and credit card payment services. Impropriety clung to the institution like a bad smell.
Quite rightly Pope Francis made reform of the Vatican Bank one of his first priorities. Within days of becoming pope he stripped the bank’s five supervisory cardinals of their $42,000 annual stipend. In a sermon at a Mass for bank staff he pointedly described their organization as “necessary up to a certain point.” He demanded tighter accounting, better reporting practices and enhanced internal controls. Ten months later, unhappy with progress, he dismissed all but one of the five cardinals in January. He also replaced the F.I.A.’s president with an archbishop with a track record of reform within the Vatican bureaucracy.
Shrewdly, as before, he has brought in outsiders. The U.S. regulatory and compliance consultants of Promontory Financial Group are combing through the bank’s 19,000 accounts. They have found poor cash-flow checks, inadequate documentation, ignorance on due diligence and a system of proxies that clouds who really controls many accounts. When the clerics in charge were asked how they answered to the regulator, they replied: “We answer to God.” Now they answer to Mr. Brülhart. Some 1,600 accounts have been closed so far.
He has hired other external advisers. Ernst & Young is scrutinizing Vatican property holdings. KPMG is bringing its accountancy systems up to international standards. McKinsey is reforming its media operations, which include TV, radio and a newspaper.
But Francis wanted to address the issue at a deeper level too. Does the Catholic Church need its own bank at all? He set up a committee, which included the Harvard law professor Mary Ann Glendon, to ask more fundamental questions. It was given powers, in a letter of authority handwritten by Francis, to summon any documents and data it deemed necessary and told to report directly to the pope, bypassing the Curia, the Vatican bureaucracy.
That committee issued its report last month — and explains the timing of the F.I.A. house-cleaning. And that was not all. Two of the bank’s most longstanding senior officials were eased into early retirement. And a new business manager from Australia, Danny Casey, was brought in to force fiscal transparency and discipline across all Vatican departments. He will be the right-hand man of Cardinal George Pell, former archbishop of Sydney, a traditionalist but also a vocal critic of the dysfunction of the Curia under the last papacy. Cardinal Pell is head of the new Secretariat of the Economy created by Francis in February to bring financial discipline to the Vatican, where each department has been acting as an individual center of power.
At one point Francis seemed set on closing the Vatican Bank, which was founded more than 70 years ago. In the 1970s, the Vatican used it to finance covert anti-Communist missions in central America. In the 1980s, Pope John Paul II used it to channel money to the Polish Solidarity movement. Now, Francis appears to have been convinced that the bank is still needed because so many bishops, priests and religious orders work in countries without secure banking systems.
But the pope is adamant it must become transparent and accountable. He is considering setting up a Vatican central bank to more closely control transfers of money abroad. That would remove the possibility that the $3 billion the bank transfers each year could be used for money-laundering — though other measures will be needed to combat the abuse of accounts for Italian tax evasion.
The scandal clinging to Vatican finances taints an institution that Francis famously said he wants, above all, to be “a poor church, for the poor.” There are many in the Vatican, wedded to a more elitist view of the church, who are unhappy at this. So far they have been unsure how to resist a pope who operates outside the old Curia channels and acts with admirable unpredictability.
What helps Francis, oddly enough, is that the scandal is far from over. One of the Vatican’s most senior accountants, Msgr. Nunzio Scarano, who worked for 22 years in the Administration of the Patrimony of the Apostolic See, the department in charge of paying Vatican salaries and managing its property and financial portfolios, is currently under arrest, awaiting trial on corruption and money laundering charges.
Nicknamed “Monsignor Cinquecento” after the 500-euro bills he routinely flashed in public, Monsignor Scarano owned luxury properties and expensive works of art. He has been accused by Italian magistrates of having transferred millions out of the Vatican Bank and smuggling it to Switzerland to help rich friends avoid taxes. The director of the Vatican Bank and his deputy, who were named in Italian court documents, have resigned. The court case will undoubtedly bring more explosive and embarrassing revelations.
On it goes. Even the previous pope’s right-hand man, Cardinal Tarcisio Bertone, is under investigation for using his influence to steer almost $20 million in Vatican Bank loans — money that was eventually lost — to a film company run by a friend. “It’s something that’s under study,” Pope Francis has told reporters. “It’s not clear. Maybe it could be true, but at this time nothing is definitive.”
One thing, however, is definite. Pope Francis knows that he has to get a grip on the Vatican’s chaotic finances. He has only just begun.
The banking dynamic being created in US International Economic Zones are the same as any third world nation----the rich and corporation have rights that protect their wealth and the 99% of citizens have no rights and any wealth they accumulate is open to theft by the 1%.
THAT IS THE PRAGMATIC NILISM OF CLINTON/BUSH/OBAMA THESE FEW DECADES.
The American people need to wake up to the decades of abuse our working class and poor have endured in the building of a lower-tiered predatory banking system by Congress, our Maryland Assembly, and Baltimore City Hall. They passed the laws deregulating and opening all kinds of predatory financial structures to operate with absolutely no oversight and accountability.
BALTIMORE'S MARYLAND ASSEMBLY POLS PASSED THE LAWS THAT HAVE ALLOWED BANKS TO PREY ON BALTIMORE'S WORKING CLASS AND POOR.
A state decides whether to allow an inter-state financial business to operate in its counties and it has the power to close them down when they are filled with fraud and profiteering. Posing progressive by passing laws limiting USURY----while having no structures to enforce those laws continue OVER AND OVER AND OVER AND OVER by far-right Wall Street pols working for Wall Street profits.
'many state legislatures use small, innocuous numbers in usury law because they are attempting to minimize the public and media outcry over their decision to legalize triple digit interest rate consumer loans'.
This article is too long to post but please glance through to see the problems long identified through CLINTON/BUSH/OBAMA
Usury Law, Payday Loans, and Statutory Sleight of Hand: Salience Distortion of American Credit Pricing Limits
Christopher Lewis Peterson
University of Utah - S.J. Quinney College of Law
Minnesota Law Review, Vol. 92, No. 4, April 2008
2nd Annual Conference on Empirical Legal Studies Paper
In the Western intellectual tradition usury law has historically been the foremost bulwark shielding consumers from harsh credit practices. Historically, the United States commitment to usury law has been deep and consistent. However, the recent rapid growth of the payday loan industry belies this longstanding American tradition. In order to understand the evolution of American usury law, this paper presents a systemic empirical analysis of all fifty state usury laws in two time periods: 1965 and the present. The highest permissible price of a typical payday loan authorized under each state's usury law was calculated. These prices were then translated into Annual Percentage Rate (APR) format following the federal Truth-in-Lending Act price disclosure regulations. Moreover, this Article also compares how each state legislature describes its most expensive permissible payday loan, with how that loan is characterized under federal price disclosure law. It does so by suggesting a new financial concept which I label: salience distortion.
This analysis produces three findings:
(1) usury law has become more lax;
(2) usury law has become more polarized; and,
(3) usury law has become more misleading.
These findings suggest that the numeric language in current state usury statutes is not chosen because it helpfully describes some expectation of commercial behavior. Rather, legislatures have chosen the language of most current credit price caps because it sounds in an ancient moral tradition - a mythology of sorts - that roughly delineates popular perception of moral and immoral interest rates. Exploiting this
This statement easily sums the laws passed allowing more and more usurious fees to be applied and as we see it falls to where banks are headquartered----we see top gun for Wall Street----Joe Biden and Delaware has been a haven for exploitative banking these few decades. National and global banks have been allowed to hide behind where they are headquartered as to how they can function in our states. Now all these banks are GLOBAL and many branches are headquartered in developing nations and will operate under Trans Pacific Trade Pact in US cities deemed International Economic Zones as they do overseas----and this is why our government has allowed open and massive frauds---that is what they do overseas.
I like this article because it shows the breakdown in predatory usury laws and of course---all avenues to credit aimed at main street were left most usurious. Just because S. Dakota and Delaware have no usury laws ----financial corporations headquartered there can operate in states allowing them with impunity.
As we see payday loan corporations can be held at bay by states and regulated.
Why don't usury laws apply to credit cards or payday loans?
Or if there is some completely different rate schedule, why the double standard?
Sean Enright, Financial accountant for taste
In the US, usury laws do apply to credit cards and payday loans.
Most credit card issuers are located in South Dakota or Delaware, states that do not have usury laws. The Supreme Court ruled in 1978 that national banks are generally subject to the laws of the state in which the bank is incorporated rather than the state in which a customer is located. For example, Wells Fargo is based in San Francisco but issues credit cards from a subsidiary in Sioux Falls.
Payday loans are a different matter. Many states do ban payday loans outright (specifically, they ban the types of loans that allow payday lending to be a profitable enterprise). In other states, lending agencies resort to various schemes and shenanigans to circumvent usury laws. normative tradition as well as common behavioral economic heuristics, many state legislatures use small, innocuous numbers in usury law because they are attempting to minimize the public and media outcry over their decision to legalize triple digit interest rate consumer loans.
We all know through CLINTON/BUSH/OBAMA none of these usury laws were enforced and states saying they did not allow payday lending really do as Maryland. It is the loan caps that progressive posing makes Maryland pols look to be protecting citizens when as always they simply allow the frauds to go wild.
'Hallinan is at least the fifth payday lender to face charges since 2014 as prosecutors target those who’ve used loopholes to operate in states that outlawed the costly loans'.
Most of the worst offenders are branch businesses tied to Wall Street banks operating as separate entities to keep the banks from more negative publicity. So, they are raising the fees, fines, and requirements pushing what is now over 50% of Americans out of what were simple community bank accounts everyone had.
States where payday lending is prohibited
In states that still have small loan rate caps or usury laws, the state page gives the citation for the law that limits rates, and the small loan rate cap.
MDMaryland State Information
Legal Status: Prohibited
Consumer loan act applies. Md. Code Com. Law § 12-101 et seq.
Small Loan Rate Cap
2.75% per month; 33% per year.
Where to Complain, Get Information:
Regulator: Maryland Commissioner of Financial Regulation
Address: 500 North Calvert Street Suite 402 Baltimore MD 21202
Patriarch of Payday Loans Indicted Amid Usury Crackdown
Zeke Faux ZekeFaux
April 7, 2016 — 11:25 AM EDT Updated on April 7, 2016 — 12:19 PM EDT
- Hallinan, others conspired to defraud 1,400 people, U.S. says
- Companies allegedly charged rates exceeding 700 percent
Hallinan, 75, allegedly participated in a conspiracy that violated usury laws of Pennsylvania and other states and generated more than $688 million in revenue from 2008 to 2013, Philadelphia U.S. Attorney Zane Memeger said. He’s charged with conspiracy to violate racketeering laws, mail fraud, wire fraud, money laundering and international money laundering.
Hallinan is at least the fifth payday lender to face charges since 2014 as prosecutors target those who’ve used loopholes to operate in states that outlawed the costly loans.
He was among the first to start offering payday loans over the phone in the 1990s using tactics, dubbed “rent-a-bank” and “rent-a-tribe”, to get around state laws. The industry has since migrated to the Internet.
Payday lenders offer cash-strapped workers advances of a few hundred dollars, to be repaid on the next payday, charging interest rates that often top 700 percent annualized. While storefront lenders are common in states where they’re legal, about a dozen states have tried to ban them.
With state regulators unable to stop the elusive online lenders, federal prosecutors are turning to a racketeering law created to prosecute the Mafia. The law, enacted in 1970, gives prosecutors more time to go after wrongdoers and sets stiffer penalties.
Hallinan allegedly evaded state laws by partnering with banks and American Indian tribes, who served as lender fronts for a fee. His companies would run the business and earn the bulk of profits, according to court documents.
In the indictment unsealed Thursday, Hallinan and co-defendant Wheeler Neff, a 67-year-old lawyer from Wilmington, Delaware, are accused of paying at least $10,000 a month to three Indian tribes in exchange for their agreement to claim ownership of Hallinan’s companies and assert that “sovereign immunity,” shielded their conduct from state laws.
Randall Ginger, 66, a Canadian citizen who claimed to be a “hereditary chief” of one of the tribes, was also charged with mail fraud, wire fraud and international money laundering.
Adrian Rubin, one of Hallinan’s former business partners, was charged in June with racketeering conspiracy. He pleaded guilty and has yet to be sentenced. Scott Tucker, another former partner of Hallinan’s, was arrested on Feb. 10 in New York, also on racketeering charges. The U.S. is attempting to seize at least $48 million from Tucker, including a property in Aspen, Colorado, a Lear jet, six Ferraris and four Porsches.
Richard Moseley, a Kansas City, Missouri, man who allegedly generated $161 million in revenue from Internet lending, was also charged in February by federal prosecutors in New York with wire fraud and racketeering. The arrests follow charges in August 2014 against Carey Vaughn Brown, a former used-car salesman in Tennessee, for allegedly giving high-interest loans to New Yorkers.
Michael Rosensaft, Hallinan’s attorney at Katten Muchin Rosenman LLP, declined to comment on the charges.
The case is U.S. v. Hallinan,16-00130, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).
We see all the attempts to pose progressive in all states as Wall Street global pols have no intention of stopping these frauds and exploitations---THE 5% TO THE 1% LOVE IT. The courts are ruling for business profits because judges have been appointed by Wall Street global pols these few decades. So, it is Congress and Maryland Assembly that needs to act AND THEY HAVE TO ENFORCE WHAT THEY PASS WHICH MARYLAND NEVER DOES.
'A 2008 law restricted payday-loan interest rates to 28 percent and imposed a $500 maximum loan limit and minimum 31-day payback period to protect consumers. Later that year, voters rejected an industry-backed effort to repeal the law'.
“And then a funny thing happened: Nothing ... How can the General Assembly set out to regulate a controversial industry and achieve absolutely nothing'?
When a Wall Street Baltimore Development 'labor and justice' organization shouts out against this and then backs forums allowing only establishment candidates have voice----they are backing the pols creating the problems.
WE MUST MOVE AWAY FROM BALTIMORE DEVELOPMENT AND ITS CORPORATE NON-PROFITS TASKED WITH PROTECTING WALL STREET.
Court sides with payday lenders
The Dispatch public affairs team talks politics and tackles state and federal government issues in the Buckeye Forum podcast.
Your Right to Know
By Catherine Candisky & Randy Ludlow The Columbus Dispatch • Thursday June 12, 2014 7:10 AM
Barbara J. Perenic | DISPATCH
A customer waits outside Advance America, 3269 S. High St. Yesterday’s Ohio Supreme Court ruling means companies can continue to make high-cost loans.Consumer advocates again are calling on state lawmakers to tighten restrictions on short-term, high-interest loans after the Ohio Supreme Court upheld the ability of payday lenders to sidestep a law intended to crack down on them.
Whether Republican legislative leaders will impose new controls on an industry that has provided a steady stream of campaign contributions to lawmakers is unclear.
The General Assembly has refused to deal with the industry since 2010, while a few legislators might face criminal charges for accepting gifts from a payday-lending lobbyist.
“Are they (lawmakers) going to listen to the will of the voters or the will of the payday lenders?” asked Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio.
In a unanimous decision, the court ruled yesterday that the companies can continue making loans that critics denounce as predatory lending to low-income Ohioans.
A 2008 law restricted payday-loan interest rates to 28 percent and imposed a $500 maximum loan limit and minimum 31-day payback period to protect consumers. Later that year, voters rejected an industry-backed effort to repeal the law.
Lenders then began making loans under another section of law, the Mortgage Loan Act, that has no cap on interest rates and allows loan repayment to be demanded in a single lump sum.
An appeals court ruled that lenders were skirting the 2008 law, the Short-Term Loan Act, and that lawmakers intended to prohibit such loans.
Yesterday’s ruling by the Ohio Supreme Court reversed the appellate decision, finding that the mortgage-loan law does not prohibit what is effectively payday lending.
The decision came in an appeal by Ohio Neighborhood Finance Inc., doing business as Cashland, which sued an Elyria man for failing to repay a $500, two-week loan with an annual-interest rate of 235 percent.
In her opinion, Justice Judith French wrote that the justices could not “second-guess policy choices the General Assembly makes.”
Since it enacted reforms in 2008, the legislature “has not taken any action to preclude the practice of payday-style lending” under other state lending laws, French wrote.
Justice Paul E. Pfefier wrote that payday lending is a “scourge ... (that) had to be eliminated or at least controlled” by the state law enacted in 2008.
“And then a funny thing happened: Nothing ... How can the General Assembly set out to regulate a controversial industry and achieve absolutely nothing? Were the lobbyists smarter than the legislators? Did the legislative leaders realize that the bill was smoke and mirrors and would accomplish nothing?”
In 2010, realizing there was a problem with the original law, the Democratically controlled House passed a bill that would have prohibited payday lenders from continuing to offer the costly loans under different sections of law.
But the bill died in the Republican-controlled Senate without a hearing.
The Legal Aid Center of Columbus and Ohio Poverty Law Center had argued that the ongoing payday loans were illegal and allowed the industry to continue to prey on poor Ohioans, trapping them in long-term, spiraling debt.
“Cashland and other Ohio payday lenders cannot sidestep the requirements of the Short-Term Loan Act by merely relabeling the same payday loan product as being made under the Ohio Mortgage Loan Act,” the groups argued.
Yesterday, Debbie Mitchley, who has taken out eight payday loans in the past two years, said lawmakers would help consumers by capping interest and limiting fees.
“I hate the interest rates, but these loans helped me when I had nowhere to turn,” she said.
Mitchley, 46 of Grove City, took out her first loan two years ago to pay rent and utility bills after her husband left her. She was unable to get a bank loan.
“You are put in a situation where you have no choice and then you get caught up and can’t get out.”
Faith and others said the ruling underscores the need for renewed legislative action.
“The court is telling the legislature that it did not do the job it set out to do and the overwhelming majority of the voters endorsed,” said Linda Cook, a senior staff attorney at the Ohio Poverty Law Center.
“Ohio consumers will remain vulnerable to these predatory loans that trap cash-strapped consumers in a cycle of debt until the Ohio legislature steps up to the plate, or Congress takes action on the national level.”
Payday lenders downplayed the decision, stressing that they comply with state laws, statutes and regulations.
“This was clearly an isolated case with very unusual circumstances,” said Patrick Crowley, spokesman for the Ohio Consumer Lenders Association.
House Speaker William G. Batchelder, R-Medina, has no opinion on whether new legislation should be introduced to clarify legislative intent, a spokeswoman said. A spokesman for Senate President Keith Faber, R-Celina, did not return a message seeking comment.
In the first 16 months of this election cycle, the payday and closely related title-loan industries have given $148,600 to Republican lawmakers and candidates.
In addition, a few lawmakers could be facing legal trouble for illegally accepting meals and Cincinnati Bengals tickets from payday-lending lobbyist John Rabenold, who recently pleaded guilty to filing false legislative activity reports. The Joint Legislative Ethics Committee is investigating the matter.
Ohio has one of the highest rates of payday-loan usage in the nation.
A 2012 survey by the Pew Charitable Trusts found 1 in 10 Ohioans had used payday loans in the last five years — the fourth-highest rate in the nation. On average, borrowers take out eight payday loans a year, spending $520 on interest for a $375 loan.
Sadly Obama and the Federal agencies handed those agencies over to Wall Street to use citizens as predatory targets for all loans tied to government and yes, again that is the middle/working class. See the broadening of which class of people are now being allowed to fall under predatory lending?
Instead of writing or enforcing public protects against predatory lending---our Federal,state, and local government is profiting from those tactics by getting KICKBACKS from businesses allowed to partner with public agencies.
When Americans throw their hands up and say what can we do----the answer is to stop allowing elections to be fraudulent, rigged, and get Wall Street pols to leave office. We cannot keep saying OH, WELL because the bottom will not be reached until American citizens live like developing nation citizens. The 1% calls that justice for the developing nation citizens in having our Western nation citizens fall into the same deep poverty. As CLINTON/OBAMA neo-liberals PRETEND they are bringing folks from all over the globe to lift them into our standards of life----the goal is the opposite----Americans will be pushed to those developing nations standards and any immigrant brought to the US will revert back to their own nation's standards.
THIS IS SARBANES, CARDIN, MIKULSKI, CUMMINGS AND ALL MARYLAND WALL STREET GLOBAL POLS LEGACY----
THIS IS WHY WE HAVE SYSTEMIC FRAUD AND CORRUPTION AND EXPLOITATION OF CITIZENS.
'Report On Predatory Lending Practices Directed at Members of the Armed Forces
and Their Dependents.
August 9, 2006'
The U.S. government’s predatory-lending program
America earns $3 billion a year charging strapped college parents above-market interest. “It’s like ‘The Sopranos,’ except it’s the government.”
By Michael Grunwald
06/19/15 05:17 AM EDT
Most parents will do just about anything for their children, especially when it comes to education. Predictably, at a time when college costs are exploding and students are staggering under more than $1 trillion in debt, one opportunistic lender is making huge profits on loans to their doting moms and dads.
Less predictably, that lender is the United States government.
The fast-growing federal program known as Parent PLUS now serves 3.2 million borrowers, who have racked up $65 billion in debt helping their kids go to school. The loans have much in common with the regular student loans that have created a national debt crisis and a 2016 campaign issue, but PLUS has much higher interest rates and fees, and far fewer opportunities for loan forgiveness or reductions.
In fact, the PLUS program, which includes similar loans to graduate students, is the most profitable of the 120 or so federal lending programs. That sounds like a good thing, until you remember the government’s profit comes from its own citizens, often citizens of modest means.
Parent PLUS was created in 1980 to provide small loans to help reasonably well-off families finance the American Dream of an undergraduate education. But in an era of skyrocketing education costs, it has grown to look a lot like publicly funded predatory lending, providing almost any borrowers with almost unlimited cash to attend any school with almost no regard to their ability to repay. Thirteen percent of undergraduates now rely on Parent PLUS, and many of their parents are falling into debt traps.
“You feel so guilty that you haven’t done enough for your kid, and they make it so easy to get the loans,” said Elizabeth Hill, a 57-year-old property appraiser from the Boston suburbs with more than $30,000 in PLUS debt. “Then they’ve got you by the cojones. It’s like ‘The Sopranos,’ except it’s the government.”
For all the controversy swirling around student loans, lending money directly to students at least has a “human capital” rationale, since recipients pursue degrees that can boost their earning power and help them fulfill their obligations. But when parents borrow, they’re often taking on new debts just as their earning power is starting to dwindle. They’re not building human capital. They’re just getting closer to retirement, mortgaging their futures on behalf of their children. And if they default, the government can garnish their wages and even their Social Security checks — less brutal than “The Sopranos,” but just as effective.
According to the White House budget office, the expected recovery rate for defaulted Parent PLUS loans is a remarkable 106 percent, a testament to Uncle Sam’s unique power as a collection agency. Overall, the program is expected to return $1.23 on every dollar it lends this year, thanks to its relatively high interest rates and minimal opportunities for debt relief, as well as the government’s relentlessness in tracking down overdue education loans. The only federal loans that generate slightly better returns are the similar PLUS loans to graduate students, which have much lower default rates.
POLITICO has been investigating the government’s bizarre $3.3 trillion loan portfolio, which is riddled with tensions between the interests of borrowers and taxpayers. Some credit programs are almost comically risky for the government, most memorably a rural broadband effort with an official default rate of a seemingly impossible 116 percent. Parent PLUS loans are the flip side of the coin, generating reliable profits for taxpayers but serious risks for moderate-income borrowers.
Just about everyone I interviewed thought Congress should consider major reforms to Parent PLUS when it takes up a higher education bill this fall, but no one was too optimistic that reforms would pass, largely because of those profits.
“Parent PLUS is classic predatory lending. It’s not a safe product for many of these families, and the debts will hound them forever,” said Rachel Fishman, an education policy analyst at the nonpartisan New America think tank. “But it’s a cash cow for the government, so it’s going to be extremely difficult to reform.”
Parent PLUS is not a trap for everyone. The latest data suggest that only 5 percent of borrowers are defaulting within their first three years of repayment, although that figure is rising rapidly. The White House budget tables suggest the expected default rate over the course of the loans is well above 10 percent, which is still well below the rate for regular student loans. There’s a wealth of evidence that college degrees boost lifetime earnings, and defenders of Parent PLUS say it’s an important tool for increasing college graduation rates. PLUS loans have also become a key revenue source for many schools, particularly historically black colleges and for-profits that tend to serve lower-income families.
But that just illustrates the increasingly tortured economic paradoxes at the heart of modern higher education, where schools have no incentive to provide affordable prices as long as they can count on federal dollars for making education affordable. Ultimately, Parent PLUS sluices more cash into the college-industrial complex, helping educators jack up their tuitions while pressuring parents to make up the difference with debt, while doing nothing to ensure they’re getting a real return on their investment. It enhances accessibility, but not really affordability, simply giving parents a way to punt the skyrocketing costs into the future. Even some advocates who fiercely defended Parent PLUS during a high-profile controversy in 2011, when the Obama administration briefly reined in loans to parents with sketchy credit histories, told me the program is deeply troubled and inherently flawed.
When I spoke to White House education adviser Roberto Rodriguez about this conundrum, he emphasized that President Barack Obama has crusaded to make America the world’s leader in access to higher education, expanding Pell grants to low-income students and “income-based repayment” for burdensome student loans, while proposing to make community college free. Parent PLUS, he said, is another important tool to help young people pursue a better life. But he also said he's concerned that too many struggling parents are getting in too deep. When I asked him if the Education Department was running a predatory lending program, he didn’t say no.
“That’s the heart of the matter,” Rodriguez said. “You want to expand access and choice, but you also want to make sure families can afford these loans.”
HILL AND HER husband are solidly middle class and proudly thrifty; she drives a 15-year-old minivan and shops at TJ Maxx. She and her husband put away money for their son Aaron’s education, and though they burned through some savings when Hill lost her job early in the Great Recession, they figured they’d be fine when Aaron chose the University of Massachusetts at Amherst over several private colleges. He also won some academic grants and maxed out on federal student loans. But even a public school like UMass cost $25,000 a year. Hill just couldn’t make the numbers work.
Until, suddenly, she could. Hill discovered she was eligible for Parent PLUS, which would cover whatever Aaron’s grants and loans didn’t. At the time, Hill felt like she had won something, even though the loans are entitlements for anyone without a recent history of “adverse credit.” She feels differently now that Aaron has moved back home with his degree and taken a job at a local liquor store — and her husband may have to postpone his plans for retirement to make ends meet.
“You’re at your wits’ end, you want to help your kid, and this fairy princess appears on your computer and says: ‘Want some money?’” Hill recalled. “You’re like: Bingo! It’s more than you can afford, but dammit, education is important, right? Then four years later, you can’t believe how much you owe.”
When Congress created Parent PLUS 35 years ago, the loans were capped at $3,000 per year, until that was lifted in 1992 so families could borrow as much as they wanted toward the cost of attendance at any public or private school. But the rules do not allow colleges to ask about their income or their ability to pay. And the borrowers don’t have to start making payments until the student leaves school, although the interest accumulates the whole time.
Congress set the maximum interest rate at 9 percent in 1980, which seemed generous at a time when mortgage rates were skyrocketing toward 18 percent, but Parent PLUS is no longer a particularly attractive deal for families with other options. The current rates are about 7 percent plus a 4 percent origination fee, a lot lower than credit card debt or payday loans, but a lot higher than subsidized student loans.
“I figured the rate wasn’t terrible, and the money was so easy to get,” said Debbie Hounanian, a 56-year-old office manager in the Los Angeles suburbs who racked up $54,000 in Parent PLUS debt. “I had no idea what I was getting into.”
Today, the average Parent PLUS loan is about $13,000, and many parents pile up much larger debts now that some schools cost more than $50,000 a year. The loans are almost impossible to discharge in bankruptcy, just like student loans, but they’re ineligible for most of the income-based payment relief available for student loans. Consumer advocates compare them to subprime mortgages before the bust, encouraging families to bite off more debt than they can chew — except that Parent PLUS also has a government imprimatur.
Toby Merrill, who runs a Harvard-affiliated legal services clinic that focuses on predatory lending, recalls one ready-to-retire borrower who contacted her after running up $150,000 in PLUS debt on three children.
“The question was: What are my options?” Merrill said. “It was sad, because the answer was: You don’t really have options.”
AS STATE AID for higher education has plunged while the cost of college has escalated, PLUS loans have become an increasingly routine method of filling the gap, with about 700,000 new loans every year. Some schools actually include PLUS in their financial aid offers, telling parents they’ve qualified to take out, say, $20,000 in PLUS loans, a rather disingenuous way of saying the actual offer will leave them $20,000 short of the school's official cost of attendance. Colleges with tight budgets have little incentive to tell students they can’t afford to enroll, and strong incentives to encourage students to load up on PLUS loans that pass directly into their coffers. The president of Albany State University in Georgia even admitted at a public hearing that cash-strapped colleges have been steering students from student loans into more onerous and expensive Parent PLUS loans, because they’re required to report default rates for student loans but not for Parent PLUS.
The 2011 controversy over Parent PLUS, when the Obama administration temporarily tightened the program’s lax vetting process, illuminated the extent to which colleges and families have become dependent on the cash. It erupted after the Education Department’s financial aid office finally recognized a longstanding absurdity: the “adverse credit” reviews for PLUS applicants were flagging some delinquent debts, but not debts that were so delinquent they had been sent to collection agencies or written off. As a result, many applicants were getting loans with worse credit than rejected applicants.
“It made no sense,” said Ben Miller, who was a senior policy adviser at the department during the PLUS flap and is now director of post-secondary education at the left-leaning Center for American Progress. “But fixing the problem had a much bigger impact than anyone realized it would.”
Quietly, the department started counting more bad debts in its credit reviews — and PLUS rejection rates soared. Students who couldn’t renew their loans began dropping out of school. And schools that relied heavily on PLUS revenue began hemorrhaging cash. At historically black colleges and universities, which had been particularly hard-hit by the recession, the number of PLUS recipients dropped 45 percent over the next two years, depriving them of an estimated $150 million. Three struggling black colleges—in Virginia, Georgia, and North Carolina — ended up shutting their doors, and larger schools like Morehouse endured mass layoffs.
“Our schools were screaming bloody murder,” said Thurgood Marshall College Fund President Johnny C. Taylor Jr., a leading advocate for historically black colleges and universities. “Forget salt — this was pouring acid in our wounds.”
For-profit schools absorbed an even bigger hit, a 54 percent decline in PLUS enrollment. But for obvious political reasons, the black schools (with fierce support from the Congressional Black Caucus) led the fight to get the first African-American president to reverse or at least delay the changes. Taylor and other advocates had several tense meetings with Education Secretary Arne Duncan, repeatedly asking why a two-decade-old snafu had to be corrected immediately, why the tougher reviews couldn’t be limited to new PLUS applicants, why a secretary who had said expanding access to college would be his “North Star” was restricting access to college. Duncan emphasized that the changes weren’t directed at black schools, but Taylor shot back that they were having a disproportionate effect on black schools.
“The secretary kept saying: My lawyers are telling us to do this; we’re doing our best to work it out,” Taylor said. “Give me a break! We were trying to revive a community with double the unemployment rate of the majority community.”
Eventually, Duncan publicly apologized to black college leaders for the abruptness of the changes, acknowledging that “communication internally and externally was poor.” He promised to consider appeals from all rejected PLUS applicants, and launched a process to write new PLUS credit rules.
“It was an operational screw-up of epic proportions,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators. “But it was a pretty good reminder that Parent PLUS helps a lot of people pay for college.”
In 2014, the department announced the new PLUS rules, essentially reversing its efforts to tighten credit checks. Bad debts are no longer grounds for rejection if they’re less than $2,085 (versus $500 in the old rule) or less than two years old (versus five years). The department didn’t even require loan counseling for all PLUS borrowers, just those who managed to get loans despite adverse credit.
“It’s a shame. Most parents would be better off taking a second mortgage,” said Natalia Abrams, director of the advocacy group Student Debt Crisis. “Instead, they’re getting trapped. They assume that if the government is offering these loans, they must be safe.”
To my surprise, Taylor told me he agrees. Taylor was probably the most outspoken critic of the administration’s short-lived efforts to rein in Parent PLUS, and he still believes it was unfair to change the rules so suddenly after a brutal downturn. But he asked me not to describe him as a Parent PLUS defender. He said the program is so exploitative that he once investigated a class-action lawsuit, but found that debt-ravaged parents were too ashamed to go public.
“It’s a horrible program, totally out of control,” he said. “We’ve got to figure out a way to make college affordable, but Parent PLUS is definitely not the answer.”
So what’s the answer?
OBAMA'S NEW CONSUMER Financial Protection Bureau has raised alarms about predatory lending by bankers and mortgage brokers. At a recent event, Richard Hunt, the president of the Consumer Bankers Association, posed a question to CFPB Director Richard Cordray: “Why aren’t you doing anything about Parent PLUS?” Cordray replied that he didn’t have jurisdiction over the federal government, but Hunt believes that if one of his members offered a similar loan product with similarly negligible underwriting standards, the bureau would be all over it.
“The silence has been deafening,” Hunt said. “It’s sinister to see the government throw money at people with no clue if they can pay it back.”
Hunt would like to see the private sector — that is, his members — take over the business. And some private lenders are starting to compete with Parent PLUS — one Rhode Island bank is offering a similar product with a much lower interest rate of 3 percent and no origination fees for the most creditworthy borrowers. But while PLUS loans don’t have the same protections as federal student loans, they do include some options most private banks won’t match, like the ability to defer payments for years.
What PLUS lacks is flexibility. Parents who qualify can borrow whatever they need for their kids to attend whatever school they want, while parents who get rejected can’t borrow a dime. In another hearing, an administrator of a North Carolina college shared a sad vignette about a homeless woman who was denied a PLUS loan, implicitly suggesting the government should have extended her virtually unlimited credit. In fact, that’s exactly what would have happened if her credit had been clean. Nobody would have been allowed to try to gauge whether her income or assets gave her any hope of repayment. Parent PLUS suffers from a paradox that also afflicts government loans for agriculture, shipbuilding and just about everything else: It’s highly risky for borrowers who need it most desperately, while the borrowers who could most easily handle the debt could probably get by without it.
Many critics argue that Parent PLUS should be abolished, and that the government should expand Pell grants and raise caps on student loans instead. But even those who want to continue the program — including Rodriguez in the White House and Republican staffers on Capitol Hill — seem to agree there are relatively obvious ways to strengthen it. The most evident would be real underwriting standards to evaluate the ability to pay of potential borrowers. Another would be strict loan caps. Or a combination of those reforms could link the creditworthiness of borrowers to the size of the loans they’re eligible to receive, the kind of calculation real banks make. Even Draeger, who represents aid administrators at 3,000 colleges and universities, said the system needs structural changes to protect vulnerable families.
“We definitely support new underwriting standards. Parents are getting in too deep, and it’s affecting their ability to retire and enjoy life,” he said. “Right now, schools just have to follow the rules, and from a consumer protection standpoint, the rules are dangerous.”
The major obstacle to reform, beyond Washington’s general dysfunction and polarization, is the immense profitability of Parent PLUS. These days, the government borrows money at almost no cost, so lending at 7 percent plus fees can add up: Parent PLUS could reduce the deficit by $3 billion this year. That means any effort to scale it back and restrict it to creditworthy borrowers would cost the government a lot of money. Politicians generally don’t like paying more money to provide fewer benefits, especially when a well-organized political coalition has defended those benefits in the past.
“That’s the perversity of a loan program like this,” one senior GOP aide said. “It makes it that much harder to fix.”
In other words, Washington has become as dependent on Parent PLUS loans as the schools that flack them and the parents who receive them. The status quo has tremendous power, because Congress likes profitable programs, schools like reliable revenue, and parents like to help their kids.
Hill and her husband have another son getting ready to start Ithaca College, just as they’re starting to pay back Aaron’s loan, but they're determined to help out again. They haven't figured out how they're going to do that yet, because there's no way they're going back to the Parent PLUS well again.
“Fool me once, right?” Hill said. “I don’t want to put my kid in a bind, but these loans are ridiculous. The guilt system only goes so far.”
This is what happens as citizens lose all property---homes, cars, jobs----they are pushed to more and more predatory debt as they fight to maintain a developed nation life style. The goal of 1% Wall Street global corporate neo-liberals and neo-cons is to have citizens with NO PROPERTY ---that is the third world status of citizens in those nations. They are allowed a TV and a cell phone because authoritarian governments use them for propaganda and surveillance of people.
What pawn shops and subprime mortgage loans aren't getting in property-----these financial structures were installed by global pols to clean the house.
Why car title loans are a bad idea
By Christopher Neiger
(AOL Autos) -- Cash advances are not a new concept in America's brand of capitalism. Many people have seen the commercials with some guy barking out, "Bad credit, no credit, no problem!" Or, "Don't worry about credit, I own the bank!"
In addition to high interest, these car title loans usually include a number of fees that add up quickly.
Anytime some guy is telling you he owns the bank, run.
Even though these lenders have been around for a while, signing your car over for a high-interest loan has become a serious financial issue.
For those of you who are unfamiliar with the concept of car title loans, allow us to explain.
At times, the best of us get strapped for cash; we may have no credit or bad credit (just like they say in the commercials), which keeps us from getting small loans from a bank or some other more traditional means.
A title loan offers you cash from the lender, in return you sign over the title of your paid-for car to secure the loan. Typically, these loans are due back in full 30 days later. There's no credit check and only minimal income verification.
It sounds pretty straightforward, but borrowing from these places can lead to a repossession of your car and a whole lot of financial trouble.
Interest rates that make credit card companies blush
Car title loans have been lumped into the "predatory lending" category by many consumers. Non-profit organizations such as Consumer Federation of America (CFA) and the Center for Responsible Lending have issued detailed reports outlining some of the title loan issues that the public should be leery about.
One of the biggest issues with these loans is interest rates. Many people dislike credit card interest rates, which average between the mid to high teens for most Americans. Car title loan interest rates make complaining about credit rates seem ludicrous.
Car title lenders are in a different category than credit card companies or banks and work around usury laws. Thus, title loan lenders are able to charge triple digit annual percentage rates (APRs). Yes, triple digits. It's not an exaggeration to see 250% APR and higher on these car tile loans and only a handful of states have passed strict laws that prohibit exorbitant percentage rates.
Even if your credit card company is charging you a high interest of 25% APR, it's nothing compared to car title loans. AOL Autos: Most popular used cars
By federal law, title loan lenders have to disclose the interest rates in terms of the annual percentage. If you have to get a title loan, make sure they don't just give you a quote of the monthly percentage rate, they have to give it to you as an APR. If they are unclear about the rates, which many can be, just know that a monthly rate of 25% is equivalent to a 300% APR.
Fees and interest only payments
In addition to high interest, these car title loans usually include a number of fees that add up quickly. These include processing fees, document fees, late fees, origination fees and lien fees. AOL Autos: Safest cars
Sometimes there is also a roadside assistance program that borrowers can purchase for another small fee. Some lenders have even gone so far as to make the roadside assistance mandatory. The cost of all these fees can be anywhere from $80 to $115, even for a $500 loan.
Most of these fees are legal, except one that lenders sometimes charge, the repossession fee. Lenders are not allowed to charge you to repossess your vehicle, but some still do. AOL Autos: Top minivans
As if high interest rates and a mountain of fees weren't enough, lenders also give borrowers the option of interest-only payments for a set period of time. In these cases, the loans are usually set up for a longer period of time (compared to the typical 30 days) and the borrower can pay the interest only on the loan.
These types of payments are called "balloon payments" where the borrower pays the interest of the loan each month and at the end of the term they still owe the full amount of the loan.
The CFA reported that one woman paid $400 a month for seven months on an interest-only payment term for a $3,000 loan. After paying $2,800 in interest, she still owed the original $3,000 in the eighth month.
Rolling over and repossession
If you think most of the people who take out these loans pay them back in full after one month, think again. Because of the high interest and the fact that these lenders cater to low-income borrowers, many people aren't able to pay back their loans in the 30-day period. This is called "rolling over" the loan.
The terms of these loans are crafted to keep borrowers in a cycle of debt and bring customers either to the verge of repossession or to actual repossession. Not being able pay off the initial loan and then renewing it the next month costs borrowers even more money in interest, on top of the original amount they've already borrowed. AOL Autos: Used luxury cars
Let's talk about repossession for minute. The CFA reported that, of the people they interviewed in their 2004 study, 75% had to give the title loan lenders a copy of their car keys. Some companies started the cars to see if they worked and took pictures of the vehicle even before a customer filled out the loan application.
A company based in Arizona said they have GPS systems installed on the cars so they can track the cars and shut them off remotely if they don't receive payment on time. That may be an extreme case, but these lenders take a customer's promissory signature very seriously. If you can't pay, they will come looking for you and your car.
The concerns for having your car repossessed are obvious. How do you get to work, drop off the kids at school, pick up groceries or go out on the weekends without a car? As if those scenarios weren't bad enough, owning a car can be some people's biggest financial asset. If the car is taken away, so goes the money it was worth.
Some states have laws that force the lenders to pay you the difference of the loan once a lender has repossessed and sold your car, but some don't. It is possible to default on the loan and not get any money back for your car, even if you only borrowed a few hundred dollars.
This occurs because car title loans are also over-secured. Typically, the maximum amount most lenders will give you is 25 to 50 percent of what your car is actually worth. However, if you can't pay back the loan they may be able to sell your car and keep 100% of the profit. Some lenders won't take possession of a vehicle but instead take the customer to court for the money. They then tack on court costs and finance charges on top of the existing loan amount.
Many car title loan lenders defend their business practices by saying they offer loans to people who would otherwise not be able to gain financial assistance. Although this may be partly true, signing over one of your most valuable assets for several hundred dollars is not the only option.
Some credit unions, like in North Carolina, have begun providing loans that have low interest rates of about 12% APR, a fixed 31-day repayment plan (to keep from rolling over a loan) and set up direct deposit out of the borrower's paycheck so that loans will be paid off in full.
Other options may be paycheck cash advances from your employer, cash advances on credit cards, emergency community assistance, small consumer loans, or borrowing from friends or family.
If you find yourself contemplating a car title loan, check out these alternative options and read the information for yourself at www.responsiblelending.org or www.consumerfed.org. If you still need to sign over your car for cash, educate yourself on the decision and know the possible repercussions of these types of loans
With this coming economic crash and deep long recession/depression the goal of Wall Street global pols is to clean out all American people's wealth and assets and CA leads the way as the REAGAN/SWARZENEGGER NEO-LIBERAL state it is-----all predatory financial fraud has origination in CA----now we see the same APR-SUBPRIME LENDING FOR MORTGAGES BACK AGAIN. This is because the coming economic crash will create mass foreclosure again and they are simply fleecing our Federal agencies again.
'But Molina says the CFPB’s proposed rules, while “an excellent first step in curbing the many abuses we’ve seen from this industry” still allow several exceptions and loopholes that the industry could exploit'.
As with the national news in 2007---they spin all this predatory and often ILLEGAL economic activity as a plus---well, at least banks are lending. This commissioner knows a crash is coming and is doing nothing to protect those citizens tying to predatory loans.
“The good news is the increased lending activity reflects continued improvement in California’s economic health,” said DBO Commissioner Jan Lynn Owen'.
People say---why do these people allow themselves to get tied to these loans? The answer is what should be trusted organizations helping people are actually WALL STREET BALTIMORE DEVELOPMENT 'LABOR AND JUSTICE' ORGANIZATIONS tasked with leading people to fraudulent vehicles like this.
Predatory, High-Interest Lending Booms In California
June 30, 2016 8:26 PM
2SAN FRANCISCO (CBS SF) — Predatory, high-APR lending in California is booming.
In 2015, the total dollar amount of installment consumer loans made by non-bank entities in California grew by almost 50 percent from 2014, according to a report released Thursday by the California Department of Business Oversight (DBO).
The DBO collected unaudited data from finance companies licensed in California and found that most loans, 54.7 percent, issued by those companies ranging between $2,500 and $5,000 had annual percentage rates (APR) of 100 percent or higher.
To put that in perspective, home buyers in California are currently advertised a 30-year fixed home mortgage APR around 3 to 3.7 percent.
“The good news is the increased lending activity reflects continued improvement in California’s economic health,” said DBO Commissioner Jan Lynn Owen. “Less heartening is the data that show hundreds of thousands of borrowers facing triple-digit APRs. We will continue to work with policymakers and hope they find the report helpful as they consider reforms of California’s small-dollar loan market.”
The report released Thursday does not include high-interest payday consumer loans in California, but the DBO plans to publish reports on California’s licensed payday lenders and mortgage lenders in the coming days.
In just one year, California consumer loans increased by over 25 percent, to roughly 1.4 million loans, according to the state’s Annual Report on Operation of Finance Companies under the California Finance Lenders Law.
The combined principal of consumer loans in from licensed lenders in California totaled $34.1 billion in 2015, up almost 49 percent over the 2014 principal of $22.9 billion.
The California Finance Lenders Law provisions places no limits on loans valued at $2,500 or higher, but does cap interest rates on loans under $2,500.
Unsecured loans, in which there is no collateral seized if the loan is defaulted on, grew greatly from 2014 to 2015. Not only did the number of unsecured consumer loans under $2,500 increase by over 30 percent from 2014, but the aggregate principal increased by over 28 percent.
California mortgage lending is also booming. From 2014 to 2015, the number of residential mortgage loans in California increased by over 61 percent from 2014 and the combined principal on those loans went up more than 55 percent, to $24.6 billion last year, the report found.
Liana Molina, director of community engagement at the California Reinvestment Coalition, a group that advocates for increased access to safe financial services in low-income communities, said Thursday following the release of the report that “while high-cost installment and car title loans are currently legal in our state, they are causing incredible financial harm for California borrowers. For consumer loans greater than $2,500, there is no interest rate cap, and it’s clear the lenders are taking full advantage.”
In early June, David Silberman, the acting deputy director of the Consumer Financial Protection Bureau (CFPB) announced a new proposed rule that would require lenders across the country to determine whether potential borrowers can afford to pay back their loans prior to issuing the loans.
“The proposed rule would also cut off repeated debit attempts that rack up fees and make it harder for consumers to get out of debt,” Silberman writes on the CFPB blog. “These strong proposed protections would cover payday loans, auto title loans, deposit advance products, and certain high-cost installment loans.”
The CFPB, which the Obama administration created in 2010, and which Republicans including Donald Trump have said they would like to eliminate, released a video in early June to explain how one type of high-cost loan, the payday loan, works:
But Molina says the CFPB’s proposed rules, while “an excellent first step in curbing the many abuses we’ve seen from this industry” still allow several exceptions and loopholes that the industry could exploit.
Now, think with all those Americans barely above poverty-----and poverty figures are not real percentages because the Federal government is using COLA from the 1960s and not today's COLA. Americans in or near poverty is over 50% and they will fall fast. Those Americans tied to normal credit debt, car or house loans will be the next to fall as unemployment rises and at each stage of citizens' trying to hold on to their property---they will become entangled in these predatory schemes----
Below you see what Obama and Congress passed to assure this is what occurs. The TOO BIG TO FAIL rescue by seizing our bank accounts was passed several years ago preparing for this economic crash and bond market collapse. While the middle/working class will see their accounts seized initially, the $600 trillion of leveraged debt in US Treasury and US municipal bond debt is far more massive then the subprime mortgage fraud scheme and it will move bank account seizures into the affluent class as well.
As people lose that account---most people today living from paycheck to paycheck and even those having cushion do not have months of cushion----all the predatory structures have been establish to catch all public assets and wealth.....
Yes, feds can take your deposits
Global trend sparked by Cyprus' confiscation of accounts balances
Published: 10/08/2013 at 8:32 PMimage: http://www.wnd.com/files/2012/01/Jerome-R.-Corsi_avatar-96x96.jpg
NEW YORK – Can the federal government confiscate all the deposits in an American citizen’s FDIC-insured bank account?
The answer is “Yes.”
As WND reported, the Dodd-Frank bill allows the federal government to confiscate bank deposits in an unlimited “bail-in” for banks “too big to fail,” provided the account holder gets equity in exchange for the deposits.
In March, Cyprus agreed to confiscate 10 percent of all deposits in Cypriot banks, calculated to result in a 10 billion euro “bail-in” as a condition of obtaining an emergency Eurozone bail-out of 10 billion euros.
The question increasingly getting asked in international banking circles is this: Was the “Cyprus Experiment” in which the government confiscated bank deposits a first step toward what may well become a global trend over the next few years?
EU proposes deposit grab
Anyone who thinks the scenario is merely academic must realize that the European Parliament already is in the process of passing new regulations adopting the recommendation of its Economic and Monetary Affairs Committee. The panel recommends that a deposit guarantee funds should not protect a deposit of funds in a “guaranteed account” can be siezed when financial difficulties call for rescuing a troubled financial institution.
The text of the EU’s Economic and Monetary Affairs Committee recommendation calls for ruling out using deposits below 100,000 euros and specifies that confiscating deposits above 100,000 euros should be a last resort.
A European Parliament press release dated May 21 specified the “bail-in” scheme proposed by the EU’s Economic and Monetary Affairs Committee should be up and running by January 2016.
With the EU moving to codify procedures for confiscating depositor funds in a bank “bail-in,” the confiscation of deposits last March in the Mediterranean island nation of Cyprus may have only been a dry run for future bank crises anticipated by EU financial experts.
Are private retirement assets safe?
WND reported Sept. 9 that Polish Prime Minister Donald Tusk announced a government decision in September to transfer to ZUS, the government pension system, all bond investments in privately held pension funds within the state-guaranteed system.
With the U.S. and the EU struggling with a debt crisis caused by slow economic growth and massive growth in social welfare programs, WND has previously reported that all private assets, including IRA and 401(k) retirement assets, may not be immune from one form or another of government takeover, even if new federal regulations that require a percentage of all private retirement assets in the U.S. be invested in federal government IOUs, including U.S. Treasury debt.
WND has reported government officials continue to eye the multi-trillion dollar private retirement savings market, including IRAs and 401(k) plans, seeing the opportunity to redistribute private retirement savings to less affluent Americans and to force the retirement savings out of the private market and into government-controlled programs investing in government-issued debt.
The ‘bail-in’ strategy
The possibility bank deposits could get confiscated by the federal government caused a firestorm of controversy following a WND story indicating Greece is considering confiscating corporate deposits to pay social security contribution shortfalls in the country.
“How is this possible?” many posting on Twitter and Facebook asked after the WND article was published.
If you read the government's take on these bail-ins they think all this is keen stuff-----global Wall Street goes crazy with fraud creating the next economic crash and then everyone else down the line pays for it. This is the global banking model installed passed by Congress and installed into Trans Pacific Trade Pact. When we think of how the predatory banking has hit our working class and poor these few decades----we need to think how the rest of Americans will now fall into these predations.
As the title states-----the first to fall will be our community and credit union banks with those accounts then coming for the Wall Street bank accounts
The Confiscation of Bank Savings to “Save the Banks”: The Diabolical Bank “Bail-In” Proposal
By Prof Michel Chossudovsky
Global Research, July 08, 2015
Global Research 2 April 2013
The Crisis in Greece: Will it result in a Haircut “Bail-in” as applied in 2013 in Cyprus?
This article was first published by Global Research in April 2013.
* * *
Is the Cyprus Bank “Bail-in” a “dress rehearsal” for things to come?
Is a “Savings Heist” in the European Union and North America envisaged which could result in the outright confiscation of bank deposits?
In Cyprus, the entire payments system has been disrupted leading to the demise of the real economy.
Pensions and wages are no longer paid. Purchasing power has collapsed.
The population is impoverished.
Small and medium sized enterprises are spearheaded into bankruptcy.
Cyprus is a country with a population of one million.
What would happen if similar ‘hair cut” procedures were to be applied in the U.S. or the European Union?
According to the Washington based Institute of International Finance (IIF) (right) which represents the consensus of the global financial establishment, “the Cyprus approach of hitting depositors and creditors when banks fail, would likely become a model for dealing with collapses elsewhere in Europe.” (Economic Times, March 27, 2013).
It should be understood that prior to the Cyprus onslaught, the confiscation of bank deposits had been contemplated in several countries. Moreover, the powerful financial actors who triggered the bank crisis in Cyprus, are also the architects of the socially devastating austerity measures imposed in the European Union and North America.
Does Cyprus constitute a “model” or scenario?
Are there “lessons to be learned” by these powerful financial actors, to be applied elsewhere, at some later stage, in the Eurozone’s banking landscape?
According to the Institute of International Finance (IIF), “hitting depositors” could become the “new normal” of this diabolical project, serving the interests of the global financial conglomerates.
This new normal is endorsed by the IMF and the European Central Bank. According to the IIF which constitutes the banking elites mouthpiece, “Investors would be well advised to see the outcome of Cyprus… as a reflection of how future stresses will be handled.” (quoted in Economic Times, March 27, 2013)
Bail-ins in the US and Britain
What is at stake is a process of “financial cleansing” whereby the “too big to fail banks” in Europe and North America (e.g. Citi, JPMorgan Chase, Goldman Sachs, et al ) displace and destroy lesser financial institutions, with a view to eventually taking over the entire “banking landscape”.
The underlying tendency at the national and global levels is towards the centralization and concentration of bank power, while leading to the dramatic slump of the real economy.
Bail ins have been envisaged in numerous countries. In New Zealand a “haircut plan” was envisaged as early as 1997 coinciding with Asian financial crisis.
There are provisions in both the UK and the US pertaining to the confiscation of bank deposits. In a joint document of the Federal Deposit Insurance Corporation (FDIC) and the Bank of England, entitled Resolving Globally Active, Systemically Important, Financial Institutions, explicit procedures were put forth whereby “the original creditors of the failed company “, meaning the depositors of a failed bank, would be converted into “equity”. (See Ellen Brown, It Can Happen Here: The Bank Confiscation Scheme for US and UK Depositors,Global Research, March 2013)
What this means is that the money confiscated from bank accounts would be used to meet the failed bank’s financial obligations. In return, the holders of the confiscated bank deposits would become stockholders in a failed financial institution on the verge of bankruptcy.
Bank savings would be transformed overnight into an illusive concept of capital ownership. The confiscation of savings would be adopted under the disguise of a bogus “compensation” in terms of equity.
What is envisaged is the application of a selective process of confiscation of bank deposits, with a view to collecting debt while also triggering the demise of “weaker” financial institutions. In the US, the procedure would bypass the provisions of the Federal Deposit Insurance Corporation (FDIC) which insures deposit holders against bank failures:
No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks. The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden. (Ibid)
Because depositors are provided with a bogus compensation, they are not eligible to the FDIC deposit insurance.
Canada’s Deposit Confiscation Proposal
The most candid statement of confiscation of bank deposits as a means to “saving the banks” is formulated in a recently released document of the Canadian government entitled “Jobs, Growth and Long Term Prosperity: Economic Action Plan 2013″.
The latter was submitted to the House of Commons by Canada’s Minister of Finance Jim Flaherty on March 21 as part of a so-called “pre-budget” proposal.
A short section of the 400 report entitled “Risk Management Framework for Domestic Systemically Important Banks” identifies bail-in procedure for Canada’s chartered banks. The word confiscation is not mentioned. Financial jargon serves to obfuscate the real intent which essentially consists in stealing people’s savings.
Under the Canadian “Risk Management” project:
The Government proposes to implement a ‘bail-in’ regime for systemically important banks.
This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.”
This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada.
What this signifies is that if one or more banks (or credit unions) were obliged to “systemically deplete their capital” to meet the demands of their creditors, the banks would be recapitalized through “the conversion of certain bank liabilities into regulatory capital.”
The “certain bank liabilities” pertains (in technical jargon) to the money they owe their customers, namely to their depositors, whose bank accounts would be confiscated in exchange for shares (equity) in a “failing” banking institution.
“This will reduce risks for taxpayers” is a nonsensical statement. What this really means is that the government will not provide funding to compensate depositors who are victims of a failed banking institution, nor will it come to rescue of the failed institution.
Instead the depositors will be obliged to give up their savings. The money confiscated will then be used by the bank to meet their liabilities contracted with major financial creditor institutions. In other words, this entire scheme is “a safety net” for too big to fail banks, a mechanism which enables them as creditors to overshadow lesser banking institutions including credit unions, while precipitating either their collapse or their takeover.
Canada’s Financial Landscape
The Risk Management Bail in initiative is of crucial significance for Canadians across the land: once it is adopted by the House of Commons as part of the budget package, the Bail-in procedures could be applied.
The Conservative government has a parliamentary majority. There is a good likelihood that the Economic Action Plan 2013″ which includes the Bail-in procedure will be adopted.
While Canada’s Risk Management Framework intimates that Canada’s banks “are at risk”, particularly those which have accumulated large debts (as a result of derivative losses), a generalised across the board application of the “Bail in” is not contemplated.
The likely scenario in the foreseeable future is that Canada’s “big five” banks, Royal Bank of Canada, TD Canada Trust, Scotiabank, Bank of Montreal and CIBC (all of which have powerful affiliates operating in the US financial landscape) will consolidate their position at the expense of lesser (provincial level) banks and financial institutions.
The Government document intimates that the Bail-in could be used selectively “in the unlikely event that one [bank] becomes non-viable.” What this suggests is that at least one or more of Canada’s “lesser banks” could be the object of a bail-in. Such a procedure would inevitably lead to a greater concentration of bank capital in Canada, to the benefit of the larger financial conglomerates.
Displacement of Provincial Level Credit Unions and Cooperative Banks
There is an important network of over 300 provincial level credit unions and cooperative banks including the powerful Desjardins network in Quebec, the Vancouver City Savings Credit Union (Vancity) and the Coastal Capital Savings in British Columbia, Servus in Alberta, Meridian in Ontario, the caisses populaires in Ontario (affiliated to Desjardins), among many others, which could be the target of selective “Bail-in” operations.
In this context, what is likely to occur is a significant weakening of provincial level cooperative financial institutions, which have a governance relationship to their members (including representative councils) and which, in the present context, offer an alternative to the Big Five chartered banks. According to recent data, there are more than 300 credit unions and caisses populaires in Canada which are members of the “Credit Union Central of Canada”.
New Normal: International Standards Governing the Confiscation of Bank Deposits
Canada’s Economic Action Plan 2013″ acknowledges that the proposed Bail-in framework “will be consistent with reforms in other countries and key international standards”. Namely, the proposed pattern of confiscating bank deposits as described in the Canadian government document is consistent with the model contemplated in the US and the European Union. This model is currently a “talking point” (behind closed doors) at various international venues regrouping central bank governors and finance ministers.
The regulatory agency involved in these multilateral consultations is the Financial Stability Board (FSB) based in Basel, Switzerland and hosted by the Bank for International Settlements (BIS) (image right). The FSB happens to be chaired by the governor of the Bank of Canada, Mark Carney, who was recently appointed by the British government to head the Bank of England starting in June 2013.
Mark Carney, as Governor of the Bank of Canada, was instrumental in shaping the provisions of the Bail-in for Canada’s chartered banks. Before his career in central banking, he was a senior executive at Goldman Sachs, which has played a behind the scenes role in the implementation of the bank bailouts and austerity measures in the EU.
The FSB’s mandate would be to coordinate the bail-in procedures, in liaison with the “national financial authorities” and “international standard setting bodies” which include the IMF and the BIS. It should come as no surprise: the deposit confiscation procedures in the UK, the US and Canada examined above are remarkably similar.
Bank “Bail-ins” vs. Bank “Bail-outs”
The bailouts are “rescue packages” whereby the government allocates a significant portion of State revenues in favor of failed financial institutions. The money is channeled from the coffers of the State to the banking conglomerates.
In the US in 2008-2009, a total of $1.45 trillion was channeled to Wall Street financial institutions as part of the Bush and Obama rescue packages.
These bailouts were considered as a De facto government expenditure category. They required the implementation of austerity measures. Together with massive hikes in military expenditure, the bailouts were financed through drastic cuts in social programs including Medicare, Medicaid and Social Security.
In contrast to the Bailout, which is funded from the public purse, the “Bail-in” requires the (in-house) confiscation of bank deposits. The bail-ins are implemented without the use of public funds. The regulatory mechanism is established by the central bank.
At the outset of Obama’s first term in January 2009, a bank bailout of the order of $750 billion was announced by Obama, which was added on to the 700 billion dollar bailout money allocated by the outgoing Bush administration under the Troubled Assets Relief Program (TARP).
The total of both programs was a staggering 1.45 trillion dollars to be financed by the US Treasury. (It should be understood that the actual amount of cash financial “aid” to the banks was significantly larger than $1.45 trillion. In addition to this amount defence allocations to fund Obama’s war economy (FY 2010) was a staggering $739 billion. Namely the bank bailouts plus defence combined ($2189 billion) eat up almost the totality of the federal revenues which in FY 2010 amounted to $2381 billion.
What is occurring is that the bank bailouts are no longer functional. At the outset of Obama’s Second term, the coffers of the state are empty. The austerity measures have reached a deadlock.
The bank bail-ins are now being contemplated instead of the “bank bailouts”.
The lower and middle income groups which are invariably indebted will not be the main target. The appropriation of bank deposits would essentially target the upper middle and upper income groups which have significant bank deposits. The second target will be the bank accounts of small and medium sized firms.
IF YOU BELIEVE THAT THE LOWER AND MIDDLE INCOME WILL NOT BE TARGETED THEN YOU HAVEN'T BEEN PAYING ATTENTION AS TO WHO IS PUSHED TO POVERTY THESE FEW DECADES.
This transition is part of the evolution of the global economic crisis and the impasse underlying the application of the austerity measures.
The purpose of the global financial actors is to wipe out competitors, consolidate and centralize bank power and exert an overriding control over the real economy, the institutions of government and the military.
Even if the bail-ins were to be regulated and applied selectively to a limited number of failing financial institutions, credit unions, etc, the announcement of a program of confiscation of deposits could potentially lead to a generalized “run on the banks”. In this context, no banking institution would be regarded as safe.
The application of Bail-in procedures involving deposit confiscation (even when applied locally or selectively) would create financial havoc. It would interrupt the payments process. Wages would no longer be paid. Purchasing power would collapse. Money for investment in plant and equipment would no longer be forthcoming. Small and medium sized businesses would be precipitated into bankruptcy.
The application of a Bail-In in the EU or North America would initiate a new phase of the global financial crisis, a deepening of the economic depression, a greater centralization of banking and finance, increased concentration of corporate power in the real economy to the detriment of regional and local level enterprises.
In turn, an entire global banking network characterized by electronic transactions (which govern deposits, withdrawals, etc), –not to mention money transactions on the stock and commodity markets– could potentially be the object of significant disruptions of a systemic nature.
The social consequences would be devastating. The real economy would plummet as a result of the collapse in the payments system.
The potential disruptions in the functioning of an integrated global monetary system could result in a a renewed global economic meltdown as well as a drop off in international commodity trade.
It is important that people across the land, in the European Union and North America, nationally and internationally, forcefully act against the diabolical ploys of their governments –acting on behalf of dominant financial interests– to implement a selective process of bank deposit confiscation.