As we learned from the Wells Fargo scandal, banks have the capacity to rob poor and working-class people. Consumers have little recourse when this occurs because they cannot afford the legal costs of fighting back, and many are bound to business-friendly arbitration clauses. In this week’s Working-Class Perspective, former Ohio Attorney General Marc Dann makes the case for new regulations that could correct this profound imbalance in our financial system.
Surely better regulations could protect these vulnerable consumers, right? In Ohio, we tried to do just that. During my tenure as Ohio’s Attorney General, I conducted hearings across the state that gave payday lending victims the opportunity to tell their stories. They talked about how they had been driven to financial ruin, lost homes, cars, jobs, and sadly, hope for the future. Their testimony was so shocking and heart-rending that the General Assembly passed and Ohio voters affirmed a law that capped the interest rates payday lenders could charge. Yet once again the vultures who own and operate the industry, protected by class action waivers and arbitration clauses and assisted by their lawyers and lobbyists, found a loophole in the law that enabled them to charge interest rates as high as 300% on short-term cash and auto title loans. Despite the legislation, payday lenders in Ohio and across the nation have continued to bring new products to market that entrap desperate and/or unwitting borrowers in virtually inescapable cycles of debt.
The renowned Working-Class Perspectives blog is brought to you by our Visiting Scholar for the 2015-16 academic year, John Russo, and Georgetown University English professor, Sherry Linkon. It features several regular and guest contributors.