Richard Eskow and the burden of proof re. payday loans (Pt. 1)
Richard Eskow, a private-sector consultant who works for corporations and organizations that include the World Bank, is rather miffed about what Lawrence Meyers had to say regarding Eskow’s payday loans argument. While Meyers is something less than professional in the manner in which he addresses Eskow (referring to him as a “simple child”), the exchange does raise some very real questions about some of the claims Mr. Eskow makes in his recent Huffington Post article “Usurious Payday Loans: Myths, Flawed Studies, and Solutions.” Much of Eskow’s criticism of payday loans seems to center on how the industry allegedly targets and exploits the poor and minorities. By way of example, if Eskow’s conclusions are actually correct, someone in Texas searching for payday loans in San Marcos TX would undoubtedly be a poor, minority targeted and exploited by their legit payday loans provider. As we’ll see, however, one who lives in a glass house should not throw stones.
Richard Eskow and the World Bank
Keep this in mind: Richard Eskow is closely allied with the World Bank. And according to the World Bank’s Articles of Agreement, its aim is to “assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes.” Yet, as the Bretton Woods Project, the World Bank imposes conditions on countries that borrow based on what is called the “Washington Consensus,” as opposed to the specific needs of the borrowing country.
Loans originated by the World Bank have been criticized for being rather unethical; for instance, Bretton Woods cites an example in which hydroelectric dams were funded and constructed even though doing so displaced indigenous people who lived in the area. Partnering with the private sector, as the World Bank does, has also raised concerns of undermining the role of individual states to provide essential goods and services, which Bretton Woods claims has caused shortages of such services in “countries badly in need of them.”
This is what Richard Eskow supports?
It’s strange that Eskow supports this, because by the end of his Huffington Post rant, he seems to think it’s actually a good idea to allow states to make their own decisions regarding payday and installment loans. But only moments before, he proposes that Congress form its own agency to regulate the payday cash advance industry out of business. It seems there’s some conflict in Eskow’s mindset over payday loans and other financial matters, if not out-and-out hypocrisy. However, let’s view the meat of his argument against payday loans, which is of primary interest.
Payday loans ‘exploit helpless people,’ claims Eskow
This is an argument that the pro-big bank establishment has used for years. Those with a religious bent go so far as to connect payday loans with usury, which is far from correct. Usury amounts to excessive and unlawful charging of interest. Payday loans do not qualify on either of those counts, and hence do not connect so neatly to Eskow’s concept of usury. Eskow cites anti-payday loans studies funded by such anti-payday loans industry groups as the Center for Responsible Lending as support for his arguments. He also pokes at pro-payday loans studies by saying that they’re often funded (at least in part) by pro-payday loans groups.
At worst, these two things could cancel each other out. That would still leave Eskow on the grounds of the legal logic where the burden of proof rests upon the accuser. But the Center for Responsible Lending was founded by Herb and Marion Sandler (mavens of the subprime mortgage crisis) and is backed by Martin Eakes of Self-Help Credit Union/Self-Help Inc. A great deal of doubt exists as to whether any of those sources are reputable when it comes to financial responsibility. Thus, Eskow’s anti-payday loans material could easily be viewed as the weaker of the two sides.