BILL CRAWFORD: Usurious proscriptions forgotten in Mississippi | Columns
Living in a very Christian state, most Mississippians should remember the biblical proscriptions on usury.
Here is one: “You have taken usury and increase, and you have greedily won from your neighbors by extortion, and you have forgotten me, saith the Lord God. (Ezekiel 22:12)
Many Mississippi leaders have forgotten.
In the past, Mississippi’s maximum annual finance charge was 8%. All that was finished was wear and tear.
Indeed, such usury rules were the law of the land for most of the 20th century. Beginning in the 1980s, states, including Mississippi, began to relax these rules. Lately, Mississippi has caved in to special interests.
The 8% maximum charge remains in effect today, but the legislator has added exception after exception. Today, each particular interest has its own rule allowing for higher rates.
Market forces tend to keep rates for creditworthy borrowers at a reasonable level. For the less creditworthy, however, market forces tend to evaporate. Reasonable finance charge caps are their only hope for fair rates.
Mississippi Today reported that 18 states, including Arkansas, Georgia and North Carolina, are banning extremely high loan fees, with a move underway in Alabama to do the same.
On the contrary, apologists for economic freedom funded by the network of the wealthy Koch brothers, for example MSU’s Market Research Institute, strongly advocate a world view that there should be no cap.
State caps on bank financing fees are 10% or 5% on the federal discount rate for traditional loans, 10% or 5% on the 20-year U.S. bond rate for mortgages and loans. equity-financed loans, and 1.75% per month (21% per annum) for credit cards.
The limits on selling charges for closed-end loans are 24% and on loans over $ 2,500, 15% or 5% above the federal discount rate. There is no cap on jointly agreed finance charges for loans over $ 2,000.
The ceiling rates for the refinancing of used cars range from 18% to 28.75% and for the financing of mobile homes from 15% to 25% depending on the amounts financed.
The maximum rate for pawnshop fees is 25%.
The highest rates for small loan companies ranged from 14% to 36% depending on the size of the loan. In 2016, the legislature added an “alternative” finance charge limit of 59% for loans over $ 4,000.
Are you getting high? Well, consider the following levels for the less creditworthy.
Payday loan companies can charge up to $ 21.95 per hundred dollars for 30-day loans up to $ 500, or an annualized rate of 263.4%.
Securities lending companies can charge 25% per month for a contract up to $ 2,500, an annualized rate of 300%.
And, as of 2016, there are “credit availability” installment loans with finance charges of up to 25% per month, plus a 1% origination charge for installment loans of six to twelve months up to. at $ 2,500. That’s an annualized rate of up to 297%.
The Catholic bishops of Mississippi have called these rates “predatory.” Clarion-Ledger columnist Jimmie E. Gates called for “stricter regulations on the amount of interest and fees they can charge.” Commonwealth of Greenwood editor Tim Kalich called the practice “sinful.”
“For the love of money is the root of all kinds of evil. It is by this thirst that some have strayed from the faith.” (Timothy 6: 9-10)
Devout Mississippians should think about these things as next year’s election approaches. Should our policy be to pray for the poor or to attack them?
Crawford is a syndicated columnist for Meridian.