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In reply to the discussion: Paul Krugman Tells GOP Senator: ‘Your Facts Are False’ On Social Security [View all]Benton D Struckcheon
(2,347 posts)60. Usury laws need to be brought back on the Federal level
I'm no fan of the Fed, as you can see by my sig, but the reason for that huge gap (the banks call that the Net Interest Margin, it's basically their gross profit) that you cite is that usury laws were repealed in the late seventies by the Supreme Court first and then by act of Congress. Congress needs to set a Federal usury limit.
Wikipedia has an excellent explanation of what happened:
Usury statutes in the United States
Each U.S. state has its own statute which dictates how much interest can be charged before it is considered usurious or unlawful.
If a lender charges above the lawful interest rate, a court will not allow the lender to sue to recover the debt because the interest rate was illegal anyway. In some states (such as New York) such loans are voided ab initio.[44]
However, there are separate rules applied to most banks. The U.S. Supreme Court held unanimously in the 1978 Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp. case that the National Banking Act of 1863 allowed nationally chartered banks to charge the legal rate of interest in their state regardless of the borrower's state of residence.[45] In 1980, Congress passed the Depository Institutions Deregulation and Monetary Control Act. Among the Act's provisions, it exempted federally chartered savings banks, installment plan sellers and chartered loan companies from state usury limits. Combined with the Marquette decision that applied to National Banks, this effectively overrode all state and local usury laws.[46][47] The 1968 Truth in Lending Act does not regulate rates, except for some mortgages, but requires uniform or standardized disclosure of costs and charges.[48]
In the 1996 Smiley v. Citibank case, the Supreme Court further limited states' power to regulate credit card fees and extended the reach of the Marquette decision. The court held that the word "interest" used in the 1863 banking law included fees and, therefore, states could not regulate fees.[49]
Some members of Congress have tried to create a federal usury statute that would limit the maximum allowable interest rate, but the measures have not progressed. In July 2010, the DoddFrank Wall Street Reform and Consumer Protection Act, was signed into law by President Obama. The act provides for a Consumer Financial Protection Bureau to regulate some credit practices but has no interest rate limit.[50]
Each U.S. state has its own statute which dictates how much interest can be charged before it is considered usurious or unlawful.
If a lender charges above the lawful interest rate, a court will not allow the lender to sue to recover the debt because the interest rate was illegal anyway. In some states (such as New York) such loans are voided ab initio.[44]
However, there are separate rules applied to most banks. The U.S. Supreme Court held unanimously in the 1978 Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp. case that the National Banking Act of 1863 allowed nationally chartered banks to charge the legal rate of interest in their state regardless of the borrower's state of residence.[45] In 1980, Congress passed the Depository Institutions Deregulation and Monetary Control Act. Among the Act's provisions, it exempted federally chartered savings banks, installment plan sellers and chartered loan companies from state usury limits. Combined with the Marquette decision that applied to National Banks, this effectively overrode all state and local usury laws.[46][47] The 1968 Truth in Lending Act does not regulate rates, except for some mortgages, but requires uniform or standardized disclosure of costs and charges.[48]
In the 1996 Smiley v. Citibank case, the Supreme Court further limited states' power to regulate credit card fees and extended the reach of the Marquette decision. The court held that the word "interest" used in the 1863 banking law included fees and, therefore, states could not regulate fees.[49]
Some members of Congress have tried to create a federal usury statute that would limit the maximum allowable interest rate, but the measures have not progressed. In July 2010, the DoddFrank Wall Street Reform and Consumer Protection Act, was signed into law by President Obama. The act provides for a Consumer Financial Protection Bureau to regulate some credit practices but has no interest rate limit.[50]
Link: http://en.wikipedia.org/wiki/Usury#Usury_statutes_in_the_United_States
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Paul Krugman Tells GOP Senator: ‘Your Facts Are False’ On Social Security [View all]
babylonsister
Mar 2013
OP
Wall street did not steal the trust fund money. How would they do that?
Warren Stupidity
Mar 2013
#5
Nope. This huckster/defender of parasites is legion (see what I did there?)
Egalitarian Thug
Mar 2013
#61
Well they cut back on paying that DEBT, as soon as they are willing to cut back on TBill Debt!!
on point
Mar 2013
#35
Johnson got his lying ass handed to him several times on This Week this morning.
Gidney N Cloyd
Mar 2013
#6
I don't see much difference between DWS and the typical non-teaparty GOP'er. nt
NorthCarolina
Mar 2013
#76
answer: we're not. capping SS taxes doesn't subsidize wall street when benefits are also
HiPointDem
Mar 2013
#83
Let's not forget the Federal Reserve's role in helping steal middle class assets.
AdHocSolver
Mar 2013
#49
There are many ways to solve it...screaming "don't touch my social security" is not one of them.
dkf
Mar 2013
#11
It would be good to do that only if workers are making more. So raise the minimum wage first
CTyankee
Mar 2013
#23
Honestly do you see the numbers I posted are from the social security administration?
dkf
Mar 2013
#69
Yes, many ways to solve it, but all of them depend on first solving the political problem.
eomer
Mar 2013
#45
The ONLY "problem" with SS is with the politicians who want to destroy it to benefit
duffyduff
Mar 2013
#56
no. it will just give the feds more money to 'borrow' for the next 20 years, at which time we'll
HiPointDem
Mar 2013
#84
Rising productivity generally means less labor employed, it's not really a good thing.
xtraxritical
Mar 2013
#27
It's not a question of rising productivity being good (which it generally is)...
YoungDemCA
Mar 2013
#63
historically, it means more labor employed at a wider variety of things and rising incomes, both
HiPointDem
Mar 2013
#85
It's never enough for this class that dramatically overestimates its size and influence,
Egalitarian Thug
Mar 2013
#78
GOP pols, pundits, and other talking heads are expert at disseminating outright lies, distortions,
indepat
Mar 2013
#17
You are very right, our founding fathers unanimously disdaned the corporate entity concept.
xtraxritical
Mar 2013
#29
And Social Security would be in much better shape IF THE MIDDLE CLASS HADN'T BEEN
wiggs
Mar 2013
#24
Republicans are basically trying to argue that U.S. bonds are "worthless"
Jeff In Milwaukee
Mar 2013
#41
Third-Way, I'd laugh if not for the fact that there are so many morons pushing this idiocy here,
Egalitarian Thug
Mar 2013
#64
It's such a simple and painless solution, remove the cap. My husband earns above the cap, and I
spicegal
Mar 2013
#74
They did the only thing they could do under the laws governing Social Security. Which in this
HiPointDem
Mar 2013
#88
"Republican-backed cap on payroll taxes for income above a certain level" = baloney. The cap
HiPointDem
Mar 2013
#81