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Saturday, October 9, 2010

Unfair At Any Rate

   I'm sure that a number of you have viewed Montel Williams endorsing MoneyMutual. The advertisements appeal to a sense of possible need and desire for financial security without telling folks that they are setting themselves up for a cycle of revolving debt. Their website discusses the popularity of payday loans and that lenders often permit extensions, but tells you nothing of the fees or rates of interest while they tell you that Montel is a great guy who wouldn't endorse something that is bad.

  The truth is that MoneyMutual hooks decent people up with loan sharks. Because of horrendous rates, chances are that your first loan will not be your last. In Ontario, the average person obtains 8 to 10 payday loans in the year following the first. It is not uncommon for people to get a new loan to pay off the interest on the old, which can be 700% or more. The debt continues as loans are issued, and there's no escape as lenders have your banking information and are not above contacting your employer to spill the details.

 What's more, these companies deliberately exploit discrimination in lending and urban wage gaps, becoming as common as liquor stores and gun shops. These offices of usury are almost always located in areas where immigrants and ethnic minorities reside. I took a look around my own city and noticed that all but one of these snake shacks is in  the areas where the vast majority of the population is Aboriginal.

  Montel Williams is supporting something that takes money from his target audience to fatten his own bank account. Folks rip Glenn Beck's association with Goldline and need to attack Montel with as much ferocity. They are both acquiring wealth promoting scams that capitalize on fear. I will dare to say that Mr. Williams is far worse, since he is taking advantage of the poorest working people, good folks who trust him.

  These loans do need regulation, and it needs to be federal. Individual provinces and states may establish rates, but online services like the one Montel Williams promotes are able to circumvent them by dealing in the wireless universe. You may live in a state that the sharks have moved out of because of a 36% interest cap, but an online lender will provide you an out-of-state loan at 1200%. The most sickening forms of usury are big business and it is unfortunate that people are so depraved that we need more regulation, but the filthiest practices are alive and need to be stopped.

  If your province, state, or nation proposes legislation to limit the scope of loan sharking, don't take it as an affront to capitalism. Support it vocally whenever you can. If a businessman is clever, he should find a way to gain income in a way that does not involve pimping the incomes of the underclass. Usury needs to be viewed in the same way that we view sweatshopping- as a distasteful insult to not only working people but to capitalism as a whole. One man's American dream should not involve creating nightmares for his neighbours.

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