Pentagon on HIGH ALERT Concerning Predatory Lending!

This week the Center for Responsible Lending highlighted the Department of Defense's recommendations calling on Congress to lower the interest rates made to military personnel. The DOD wants a 36% cap on annual interest rates for loans to military borrowers. This cap would include extra fees and charges or products like credit insurance premiums. Adding to all the deaths and casualties currently suffered in Iraq, the DOD is also wrestling with predatory lending that negatively impacts 17% of miliatry service persons. This is good news~in that we need more pressure on legislators to curb predatory lending.

And local community activist Chuck Mehan agrees. He will be on the air Thursday, September 28, to talk with me about this major development and how predatory lending harms Tennesseans, especially seniors. Indeed, Mehan is the S.A.L.T. (Seniors And Law Enforcement Together) go-to guy in the City of East Ridge.

I'll ask Mehan about payday lending and title deed practices locally. Just last week, USA Today reported that "payday lending has become a $40 billion annual business (in loan volume) with more than 22,000 U.S. outlets, according to the Community Financial Services Association of America, the industry's trade group. By comparison, Starbucks has 8,624 U.S. locations and McDonald's about 14,000."

Unfortunately, getting a loan quickly often sounds too good to be true for people down on their luck. You get processed in 15 to 20 minutes with no credit checks. And bang, you're holding as much as $1,000 in your pretty little hand.

For years, predatory lenders ~ which include payday loan sharks, pawn shops, title deed lots, rent-to-own stores, and "refund anticipation loan" fronts ~ have done almost whatever they want in Tennessee and Georgia, gouging the low-income and elderly with outrageously high interest rates (from 300% to 1,000% annually). But that changed in Georgia 2004 and 2005, despite a strong challenge by out-of-state banking institutions supporting loan sharks.

According to the Center for Responsible Lending, the state of Georgia took legislative action and passed The Georgia Act which "caps small consumer loans at Georgia's small loan usury rate of 60 percent per year, adds stiff criminal and civil penalties for violators, and bars non-bank lenders from partnering with banks to avoid Georgia's usury laws."

We'll Tennessee have the courage to change our lending laws too?