Usury and Market Forces:

Let us first define what we mean by the term usury. Laws regulating the maximum rate of interest that could be charged by a person or agency making a loan did exist in America until relatively recently. These usury laws served to control the avarice of banks and individuals. As part of the mantra of market forces the congress was convinced to repeal these laws. When this happened rates increased rapidly. Another thing increased almost as rapidly. The number of words in the contract between the loan maker and the individual borrowing the money was increased by many fold. All those words were not there to protect the borrower. Far from it in fact he had no rights to refuse to accept the changes.

Any first year law student can tell you that contracts that are unilaterally changed are essentially broken. But if you read the contract closely you will see that part of the wording grants that right to the bank. In fact the credit card contract has become so complex that no one knows what it means. Of one thing we can be sure; all that verbiage is not there to protect the person that is seeking to charge a purchase. Simple math can show you that it will take decades to pay off a credit card balance of $3,000. Yet most credit card holder’s card balance is well in excess of this amount.

So let’s see where this leaves us. You have a credit card company that is affiliated with a bank charging outlandish fees to use a line of credit and remitting a portion of those fees to one of many banks. Now let’s consider the other side of the equation. For you see banks not only loan money they also serve as a repository for funds in the form of CDs and passbook savings accounts. Let’s examine these by doing a Google search of CD rates:


Google Search


Today that looks like an APY of between 2.8% and 1.90%. This at the same time that many of these same banks are charging between 12.0% and 32.5% on credit card debt, clearly there is a discrepancy. Why should there be a spread of 10 to 30 percentage points you might ask. The answer is quite simple that has happened because there was no one regulating the loan industry. In fact if someone tried to sell food as badly tainted as these loan products they would be put in jail. What is true of credit cards is doubly true of mortgage loans. In fact by the banks own words these loans have been deemed “toxic”. What and who made them toxic is the question you have to ask. The answer is painfully simple; the banks made them toxic because the pay off was so onerous than many people simply walked away from their homes. They simply owed more than they could pay.

Now comes the truly scary part. Our government is giving these same people tax dollars in the hope that the crooks running the banks will change their ways. Do they truly think this will happen. Let’s see what has in fact happened. The number for foreclosures has increased. The loans to businesses that need credit to keep the doors of American industry open have dried up. The rate charged to tax payers by these same banks on credit card debt has been increased all the while availing themselves of massive amounts of public money from the government.

All of this is happening right before our eyes and all the while we are told that debt holders and American labor must make sacrifices. Enough is enough. Throw these scallywags out and do not give them a single penny more until and unless they increase their rate on passbook savings or lower their credit card rate until the “spread” is returned to historic norms.