Unlike deer or other animals fancied for hunting, Republicans in North Carolina are seeing to it that it’s always open season on consumers.
They’re in the process of overriding a veto by Gov. Roy Cooper of a proposal — sneaked into an unrelated bill on the last day of this year’s General Assembly — to help lending companies sell more high-interest-rate consumer loans. These loans often prey on lower-income people, who can’t qualify for loans from mainstream lenders at more reasonable rates.
The bill was helped along by lawmakers who enjoyed some of the $500,000-plus donated by those connected to the lending industry to politicians and political groups since 2013, with 92 percent of it going to Republicans.
Basically, the bill expanded the types of loans to which companies can add “credit insurance,” a payment on top of the loan that’s said to protect the borrower in case of an emergency that means he or she can’t pay back the loan. Bob Hall, of the great watchdog group Democracy North Carolina, has called the product “junk insurance.”
The state attorney general warns consumers about credit insurance on its webpage, saying, “In North Carolina, lenders cannot require you to buy most types of credit insurance. But some lenders may imply that credit insurance is necessary for you to get the loan, or they may automatically include the insurance as part of the loan agreement you’re given to sign.”
In other words, beware.
But of course, many borrowers aren’t aware and they’re unable to get loans anywhere else. Under this measure, the veto of which has been overridden by the state House and will be overridden by the Senate, the types of things to which credit insurance could be added would be expanded beyond “personal household property,” the current category, to include other personal property such as jewelry and off-road vehicles. Obviously, that’s expanding the temptation for consumers, and the likelihood that they’ll take out such loans with high-interest payments — and get themselves deeper and deeper in debt.
It’s true, of course, that consumers are responsible for their actions, that they should not let their desire for goods they don’t really need cause them to go into debt they can’t afford to carry. But all people of all ages and all income levels are faced each and every day with displays in malls and breathless pitches of all kinds and they also are pressured by their children, who want what they believe all others have. Toward the end of having all they want, even affluent consumers with good incomes will go into debt, no more resistant to that temptation than those of lower incomes.
But people who don’t have as many assets or higher incomes are more vulnerable to being gouged by lenders who know exactly what they’re doing, and that’s why laws exist to protect them. Now, under Republicans, those laws are going away.