Private-sector consultant Richard Eskow, who works for businesses and organizations that include the World Bank, is rather annoyed with Lawrence Meyers’ response to his anti-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 the payday loans industry appear to be centered on how the industry supposedly targets the poor and minorities. As we will soon see, however, one who lives in a glass house should not throw stones.
Richard Eskow and the World Bank
Keep in mind that Richard Eskow is closely allied with the World Bank. And their aim, according to the World Bank’s Articles of Agreement, 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 forces stipulations on countries that borrow based on what is called “Washington Consensus,” rather than just 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. Joining forces with the private sector, as the World Bank does, has also raised worries of destabilizing the functionality of individual states to provide essential goods and services, which Bretton Woods claims has caused a shortage 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 loans. But he proposes that Congress form its own agency to regulate payday loans out of business just moments before. It seems there’s some conflict in Eskow’s mindset over payday loans and other financial matters, if not out-and-out hypocrisy. But let’s consider the mean of his argument against payday loans, which is of primary interest.
Payday loans ‘exploit helpless people,’ claims Eskow
For years, this is an argument that the pro-bank establishment has used. Those with a religious bent go so far as to connect payday loans with usury, which is far from correct. Excessive and unlawful charging of interest is what usury amounts to. Payday loans do not reflect on either of those counts, and hence do not make sense to Eskow’s idea 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. Eskow could still be left on the grounds of the legal logic where the burden of proof rests solely upon the accuser. But the Center for Responsible Lending was established by subprime mortgage experts Herb and Marion Sandler and is supported 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. Eskow’s anti-payday loans assertion could therefore be viewed as the weaker of the two sides.
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