Tag Archives: Utah

Predatory Loans in Utah

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Predatory Loans

I just read an interesting article about how a loosely regulated market allows for what can only be described as predatory loans in Utah. It’s an interesting question for me because the main rational behind allowing loans with an interest rate of up to 200% is aligned with a Libertarian ideology.

Basically, predatory loans in Utah are allowed because the legislature in that state doesn’t put a legal cap on the highest interest rate allowed. Most states do so and the Federal Government mandates active-duty service members, but no one else, cannot be charged more than 36%.

Are they Predatory Loans?

Let’s dispense with this question right away. The loans are structured in a way to trap low-income borrowers into paying back far more than they took out. The loans are absolutely predatory. Most of them come with a 90-day stipulation that if you pay it back in that amount of time the higher interest rate doesn’t apply.

They are largely taken by people in desperate situations, often an unexpected car repair. Without a car the borrower will lose their job. Without a job …. Anyway, the design is predatory, that much is certain.

The Service of the Loan

While the loans are certainly predatory, the people who take them are in desperate need and cannot get a loan legally any other way. They generally have poor credit ratings and cannot get a loan from a bank that doesn’t offer such a high interest rate. This because most states regulate an interest cap.

Banks know that such loans have a high default rate. In order to make up for that default rate, a crazy-high interest rate is charged for those that cannot repay immediately.

The people who take these loans are the same people who end up owing money to extra-legal lending sources and payday loan companies.

Different than Banks and the Government?

I’ve written about how the government itself operates like a loan-shark with ridiculous fees and escalating fines for late payments. I’ve also talked about how the government and private industry intentionally created the student loan situation in which we find ourselves.

The government intentionally bankrupted the United States Postal service largely at the behest of banks in order to take out massive loans with the never-ending interest payments.

Financial Ruin of Unpaid Predatory Loans

One of the interesting things about loans is if a bank gives issues too many that default, the bank itself goes out of business. The bank doesn’t have a pile of cash sitting in the vault. They take the money you give them in interest payments and loan it to others. If enough others fail to pay, the bank gets into trouble. Some may remember the recent housing crisis. The student loan crisis we currently face. These are directly related to too many bad loans resulting in defaults.

This is why the Utah banks in question don’t do the majority of their business in such loans. It’s a dangerous game to play.

Is Utah in the Wrong?

Is Utah wrong to allow banks to charge up to 200% interest rates for these types of loans? If the banks do not provide this service, will extra-legal loan-sharks step in? The government, with their long record of predatory behavior, is hardly an institution I trust to rein in this practice.

There is real damage, of course. A certain percentage of those who take out the loans cannot pay them back in 90 days and end up with unsustainable payments. Even if people stop paying and incur some court-ordered lesser payment plan, they suffer financial difficulties for a long time if not the rest of their lives.

Conclusion

Ok, Tom. The loans are predatory and people will suffer. But you don’t think regulating them will help. Do you have anything useful to say or was this just an intellectual exercise?

Good question. I think some problems just don’t have solutions. As long as people are poor and need money, such loans will exist, legal or illegal. It’d be nice if we didn’t have poor people. If there was a way to provide for all people in need, whether they deserve it or not, whether they’ve earned it or not. There currently is not such a system in place.

I guess my only real point here is to beware of what appears to be a simple solution to a complex problem. It can make things worse rather than better.

Tom Liberman

Utah to Make Polygamy a Misdemeanor

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polygamy a misdemeanor

Mormon hotbed Utah is poised to make polygamy a misdemeanor crime instead of a felony and this Libertarian applauds them. I’ve written several posts about why the government should not be involved in the marriage game; either to promote it or make certain types illegal. This new legislation is particularly interesting from a historical perspective because Utah was allowed to become a state only if a ban on polygamy was written into their constitution.

This law is being promoted as a good thing because women and girls, primarily, are being victimized in a variety of ways but are afraid to come forward because the polygamy laws could potential put them in jail. The argument being that making polygamy a misdemeanor will encourage women who are raped, kidnapped, and otherwise victimized more willing to come forward.

It’s important to understand this argument is completely true but not only for making polygamy a misdemeanor. Laws against prostitution and the war on drugs have little effect to stop either but anyone who engages in these trades can more easily be victimized because they cannot come forward to report such a crime. Remember when Omar robbed the Co-op? What were they going to do, call the police?

I just read a story about how the Coast Guard is proudly offloading twenty tons of seized cocaine in San Diego. I feel the vomit rising in my throat when I read how this evil drug will never make it into the schools and communities. Meanwhile, far more of the stuff under a pharmaceutical brand name is prescribed and sold legally throughout the United States. But, the War on Drugs, one of my favorite topics is not the subject of today’s conversation.

This is the reality we must confront when creating laws that ban a practice or product from willing consumers. We essentially create an entire criminal enterprise where there might be a simple capitalistic market. This inhibits those who engage in the activity from seeking the protection of law enforcement and makes it more likely they will be victim to horrific crimes.

Young girls are forced into polygamous marriage and subject to serial rape. They don’t come forward readily because they are criminals also, in the eyes of the law, and fear being imprisoned. If that doesn’t resonate with you, it’s hard for me to imagine anything will.

Making polygamy a misdemeanor is a step in the right direction but the reality is clear to me. Consenting, legally capable adults should be able to marry anyone, of any gender or number, they desire. The government should have no role in the enterprise.

Tom Liberman

PacSun Shirts were Obscene so Mom bought them All

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PacSun t-shirtsThere’s a really interesting story making news in the little town of Orem, Utah. At the local University Mall they had a bunch shirts on display made by a company called PacSun.

A woman browsing through the mall with her son found pictures on the shirts to be obscene. The shirts that Judy Cox found offensive are from a campaign called Visual by Van Styles.

Cox started off by complaining to the store manager who explained that they would have to get approval from company management to remove the shirts from the display. Not satisfied with this answer Cox purchased all nineteen shirts.

No problem, right, her money. However, her plan is to return the shirts after 59 days thus meeting the store’s return policy. There’s my issue.

She has, in my opinion, committed larceny by false pretenses. The store will be unable to sell those shirts for 59 days and this represents a loss to them even if she returns them.

If you’re a lawyer, I’d really like to hear from you about the legality of making a purchase with the intent to return it.

I do think a community has the right to determine what is obscene and if an ordinance passed by the city prohibited shirts of women with bikinis from being displayed, that is their business. The right to sell a shirt with a particular image is not protected by the Constitution of the United States.

That should have been the route Cox took rather than her approach which is, to my way of thinking, theft. If she goes through with her plan of returning the shirts she should be tried and, if found guilty, put in jail. A crime is a crime.

My major complaint here is that one person should not be allowed to make such a determination for a community. We live in a Representative Republic. If Cox wanted to protect the children of her community from such images there are legal and reasonable methods to achieve that. She could have brought a motion to her City Council and if enough people agreed with her then such displays would be banned.

Those of you who will defend Cox please keep in mind that there is someone out there who finds something that you enjoy to be offensive.

Should a vegan be allowed to purchase every wool and leather item in the store and return in 59 days later?

Should a PETA member be allowed to purchase every fur coat and return it 59 days later?

Should a devout christian be able to purchase every copy of various Harry Potter novels and return them 59 days later?

We live in this fantastic country wherein the people vote and have a voice in their government. When you resort to criminal activity to enact your own brand of justice; take a moment to consider the kind of country you would live in if everyone felt the same way.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Spear of the Hunt
Next Release: The Broken Throne