Ellison begins his battle against predatory lenders

[question everything]

StarTribune.com
Ellison begins his battle against predatory lenders

Lending practices are the place to begin to work against poverty, Rep. Keith Ellison says.

By Eric Black, Star Tribune

6/12/07

U.S. Rep. Keith Ellison told a Minneapolis audience on Monday that U.S. hunger and poverty should be eradicated. Universal health care, stronger unions, higher wages for workers and lower incomes for corporate chief executives are some of the elements that should be included in a broad anti-poverty agenda, Ellison said. But as a freshman Democratic congressman on the House Financial Service Committee, Ellison proposes to start his personal war on poverty with a narrower focus on predatory lending practices by some credit card and mortgage companies.

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Under this practice, known as "universal default," if you fall behind on your payments on one credit card, another company you have a credit card with can raise the interest rate it charges you. Ellison rejected the argument that if a creditor finds out you are having trouble paying your bills, he might justify a rate increase on the grounds that you are at risk of defaulting on your debts. If a creditor knows that you are having trouble making payments on another account, Ellison said, it might be prudent to cut you off from further credit, but it is unfair to raise the rate on your existing debt. "That's not a matter of risk-based pricing" as defenders of the practice argue, "it's just a matter of getting all the money you can," he said. Ellison's bill would ban the practice. He used it as an example of how predatory lending practices can take a struggling family and nudge it into poverty.

Acknowledging another conservative argument, that the free market will weed out such practices, Ellison said that "when the market can solve a problem, it should be allowed to; but if it can't solve the problem, it should not be allowed to cause all this suffering."

Ellison criticized other lending practices, such as high-interest loans or loans with hidden charges, mostly to low-income families. His list included "payday loans," which are secured by a worker's next paycheck; "rapid refund loans," in which borrowers sign away their expected tax refund, and subprime mortgages.

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http://www.startribune.com/587/story/1239727.html

[Donnachaidh]

1. Payday Lenders -- a new name for LOANSHARKING

And it's being pushed all over the country.

This crap should be flat out BANNED in the US. These *lenders* are going after the poorest of the poor.
We used to put loansharks in JAIL. Now we allow them to advertise nationally.

[Minnesota Raindog]

2. I wonder how much help his MN colleague Michele Bachmann will be?

Michele Bachmann (MN-6) is on the House Financial Services Committee and has raked in nearly $300,000 from the financial/insurance/real estate industry, according to OpenSecrets.org:

http://tinyurl.com/3bxukz

I don't think Ellison can count on much help from Michele and her fat-cat financiers.