UK Guardian: The struggle against debt servitude
A kinder, simpler solution to the problem of runaway consumer debt: cap the interest rate at a reasonable figure. Usury laws were once universal, probably owing to some language in the Bible on the proper rate of interest. That all went by the wayside in the Reagan era, when states revised their usury laws to remove penalties for excessive interest. S.C. did so in 1982. The current Great Recession places extreme financial pressure on working people who must service debt acquired in fatter times, in some cases in complex mortgage arrangements that are partly to blame for the crisis.
London Citizens, a civic association in the UK, is sponsoring a campaign to cap the rate of interest in that country:
Following the financial crash of last year, a new issue emerged and a new campaign was forged. Our members experienced an increase in interest rates on money loans. The banks, many of which were now owned in substantial part by the public, were borrowing at half a percent but lending the money back to us at 40 times that rate, and more. Each of the major banks have credit card interest rates that start in the 20s and rise steeply with penalties. The same is true of consumption and mortgage loans when penalty payments see the rates jump into the 40s and 50s – more than a hundred times the interest charged to the banks. This is setting aside the bridging and pay-day loans sold by companies such as Shopacheck and Providential, where the interest rates start in the hundreds and go their own way from there. The cost of not earning enough to live has never been higher.
Our faith communities had no difficulty in naming this. They call it usury: the charging of excessive interest by the rich upon the poor with the corresponding transfer of whatever slender assets the weaker party had accumulated. They think it’s wrong and have decided to do something about it. And so was born the anti-usury campaign.
This has one goal: to establish a maximum beyond which it would be illegal to charge interest. We have a meeting tomorrow with the Royal Bank of Scotland where we will raise the possibility of a 10% maximum credit card. They are committed to being “responsible lenders” and we would like to help them fulfil that.
Links: London Citizen
Posted on August 11, 2009, in economics, political economy, Uncategorized and tagged anti-usury, Glenn Setzer, London Citizens, Maurice Glasman, Option ARMs, payday lending, usury. Bookmark the permalink. Leave a comment.