The come-on

Usurious lenders deserve no protection

Issue: "California school shooting," March 17, 2001

When the U.S. Congress voted last week to make it a little harder than it used to be for common citizens to declare bankruptcy, you might think it

was an appropriate call to personal trustworthiness in an overly permissive age of wild irresponsibility. I wish I could be that positive about it.

Granted, as I suggested in this space 11 months ago, there are some issues where you're tempted to say dismissively, "A plague on both your houses!" Bankruptcy law sometimes appears to be one of those issues-since it's hard to have patience with people who run up big bills on items like cable TV, veterinarians for their pets, and eating out.

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But these are just the little people. I've been one of them. We're dumb, naïve, impatient, undisciplined-and all set up to be taken advantage of.

The big banking corporations are fully aware of our weakness, and altogether ready to exploit it. That's why your mailbox is cluttered every month with a dozen or more invitations to apply for still one more credit card with a compelling 2.9 percent interest rate, or even no interest at all. I heard this week of a young man, just 18 years old and a senior in high school, who over the last few weeks got enough such offers so that, if he had responded, he could already be $100,000 in debt.

But it's all a come-on, of course-as sin so often is. For the interest rate will soon be hiked, and not to something reasonable like 10 or 12 percent but to something usurious like 20 or 22 percent. That's when economic slavery sets in. It's pretty hard to turn in old cable bills, old veterinarian bills, and old restaurant receipts and say remorsefully, "Here, take this back. I've matured a bit, and decided I don't need those things after all." You'll still owe for all your past weaknesses, and in fewer months than you might have imagined, you'll also owe multiples of those amounts in interest charges. You've become an indentured servant.

All that is not just the unfortunate side effect of the credit card companies' plans. It is instead exactly what the credit card companies have in mind. Their highest profits come when they are able to drive you to a point just this side of bankruptcy, but not quite there yet. Your desperation forces you to fork over still another payment, two-thirds of it for interest and the rest just barely reducing your principal balance. Only your sense of honor and self-respect keep you from throwing up your hands and disowning your debts.

In recent years, however, that sense of honor and self-respect have been so drastically diminished in our culture that hundreds of thousands of discouraged debtors have more and more easily stepped over the line and chosen bankruptcy. Clearly, the more often that happens successfully for a few, the more easily it will happen for others. The trickle becomes a stream, and the stream becomes a river. But the credit card companies can't afford those rivers-even if they're of their own making-and so they've stepped in to dam them up as best they can. That's the main reason for the new legislation now powering its way through Washington.

As is typical, the big corporations have the powerful voices, while the little folk-culpable as they may be for their sloppy spending habits-have not much voice at all. In fact, one reason the credit card companies have a strong voice is that all that 22 percent interest has lined their pockets pretty well.

The Bible doesn't defend gratuitous buying and sloppy financial habits on the part of us little people. Indeed, the book of Proverbs warns us against both.

But the Bible speaks in outraged terms against those who manipulate and exploit the poor. The prophet Ezekiel at one point suggests capital punishment for such behavior. The reason is clear: The party charging outrageously high interest is by definition taking advantage of someone in need. God calls his people instead to help those who are in need.

Even worse, corporations engaging in such practices suck their customers in through blatant dishonesty. Most of us grew up knowing the difference between "fixed interest" and "variable rate interest." "Fixed" meant a constant rate for the life of the loan. "Variable" meant you should look out for changes. But in today's parlance, definitions as well as rates have become variable. In the last week alone, I've received three direct mail offers for credit cards at rates that are "fixed" for as little as three, four, or six months. Then those rates leap to as much as 24.9 percent!

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