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Michael Lane and Ward Scull | Legalized usury

There is a legitimate concern among citizens that the Obama administration will have to raise taxes in order to pay for the ambitious agenda it has taken on in the first six months of his presidency. Included in the debate about taxes is the issue of “Who pays?” and will those new taxes be progressive, flat, or regressive?

In the U.S., unlike Northern Europe, taxes have traditionally been mildly progressive; although some presidential candidates have proposed the flat tax, it is most likely that the mildly progressive tax regime will hold sway. That seems fair to most Americans.

That sense of fairness, oddly enough does not pertain to consumer lending which is some areas can be wildly regressive. The rich and middle class watch closely and shop cautiously to ensure they get the lowest available interest rates on car loans, mortgages, and other consumer loans. Competition keeps those rates within generally reasonable bounds.

Not so for the working poor and lower middle class when they have a financial crisis. Of course, there are willing lenders but few or none offering rates at more or less 10 percent APR. No, payday loans, car title loans, and open ended loans to those Virginians come with annual interest rates approaching 400 percent. That is the interest rate that has been authorized by the Virginia General Assembly.

The average citizen might think that an annual interest rate of 36 percent is usury and would not be permitted in a nation and state such as ours. But predatory lenders have scorned such a ‘ridiculously low rate’ and our legislators in Richmond have supported their demand for triple-digit interest rates year after year.

This legalized usury is a disgrace to our great state and the legislators who protect this predatory industry need to be sent a message that Virginia voters want reform and we want it in the next session of the General Assembly.


Michael H. Lane and Ward Scull are the co-founders of Virginians Against Payday Loans.

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