There are few things I despise more than corrupt politicians who intentionally screw over their constituents for their own personal power or profit. One of those things is predatory lenders, like those drive through payday loan places. Although I am fortunate enough never to have had to go to one of those places, many Americans have, and increasingly, our military families are among those who slip into the noose of outrageous usury fees in order to get from one paycheck to the next.

In case you aren’t familiar with the practices of these ‘legitimate businesses’ let me fill you in on some of their favorite schemes, courtesy of this study from the University of Florida:

“Charges for payday loans vary, but a typical lender will charge around $17 or $18 for a two-week loan of $100. That’s roughly equivalent to an annual interest rate of 450 percent.”


“After collecting data from more than 13,000 ZIP codes across the country, the study’s authors found payday loan operations clustered in areas near military bases.”

And another from the Seattle Post-Intelligencer:

“Their business is geared toward confusing people and trapping them in this treadmill and squeezing every dollar that they can out of them,” said Robert Pregulman, executive director of WashPIRG, a consumer protection group in the state. “The whole premise behind the industry is to target a certain group of people and take advantage of them.”

Let’s look at some truths here: in our current era of unending pre-emptive war and the massive call-up of National Guard and military reservists to act as cannon fodder, the number of active military families is increasing. At the same time, Congress, filled with ‘we love the troops’ Republicans, have been cutting benefits for the troops while increasing their deployments. For many reservists and guardsmen, this amounts to leaving a civilian job for full time military service with lower pay. Lower pay coming in makes it harder for families to pay the bills. Creditors come calling, credit ratings plummet, and the option of getting regular credit terms evaporates. In comes the payday loan, with all of its associated pitfalls and trapdoors waiting for a financially unsavvy customer to come walking through the door.

Here’s the rub though. The UCMJ (those rules that govern military conduct) takes a dim view of soldiers who can’t repay their debts. Penalties include docked paychecks, loss of rank or security clearance, and possibly time in the brig. As more military members turn to quick loans to make it to the next payday, they become more vulnerable to these consequences, especially as fees and interest rates stack up. This loss of manpower can be the difference between having a ready force or having one half-staffed or under trained. And we’ve all seen the consequences of not having good intelligence, enough troop strength, or poor training. It’s called the aftermath of Iraqi Freedom. By targeting military families, these businesses directly affect the security of our nation. They must be helping the terrorists then, right?

But it’s not just the terrorists who use suicide bombing as their main military tactic who are being aided and abetted by these payday loan companies. It is also local, home grown terrorists (read politicians who permit these predators to continue using these tactics) who benefit through donations from the payday loan industry. And as one lawmaker admits, the rise of these lending houses were made possible by lawmakers across the nation.

“We made it a much more profitable industry,” said Rep. Shay Schual-Burke, D-Normandy Park, referring to legislative action in 2003 that raised the maximum payday loan by $200 to $700. “We actually authorized these predators. I’m not too proud to say that we made a mistake.”

The answer to the problem goes beyond just regulating this ‘industry’ though. At the heart of the matter are two very key issues: education, and congressional responsibility.

Education, real education about personal finances, budgeting, and spending habits need to be addressed in high school or even junior high school if citizens (military and civilian alike) are ever going to break the cycle of debt. We need to teach people that a responsible personal budget can go a long way towards achieving a more satisfying life. And regardless of income level, knowing how to budget what you earn and owe is a skill all should have.

Congressional Responsibility, taking the form of laws against obscene interest rates, caps on maximum short-term loan amounts, fuller disclosure, and limiting the number of short-term loans a person can get would be a start. But for military families, the bigger solution lies in fully funding military benefits, raising military pay at the lower ends of the pay scale, and creating and funding programs for the families of active duty personnel.

Defenders of payday loans need not come crying to me about how these companies are just providing a service, and if you’re dumb enough to use them you get what you deserve. They may be providing a service, but so does the mob, and I’ve yet to see a politician stand up in praise of mob practices. And to call someone who is strapped for cash dumb does not address the issue at all. In many cases, the only dumb thing they did was take a job in the military during a time of war with a Congress and White House more concerned with corporate profits than the men and women who are keeping those profits afloat with blood and bullets.

I don’t know what we can do about this, other than pressure lawmakers to rein in these companies. But somehow I don’t think this is high on their radar screen at the moment. They all seem too busy battling each other over gay marriage, abortion rights, and other hot button non-issues. That, and racing to be the next politician indicted for corruption.

Just a little something to think about as we enter the Memorial Day Weekend.

(Cross posted at Bring It On)