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“Yeah, some folks inherit star-spangled eyes,
Ooh, they send you down to war, Lord.
And when you ask them, how much should we give,
Oh, they only answer, more, more, more.”
-John Fogerty and Creedence Clearwater Revival
I am tired of watching military people be ripped off.
My personal crusade has been to ban the sale of contractual mutual funds. I want Congress to stop the sale of all contractual mutual funds, but I really want them to stop the sale to servicemen and women.
The mutual funds make it almost impossible for “investors” to make money. The only “winners” are the people who peddle them.
I was happy last year when Congressman Geoff Davis of Kentucky sponsored a bill to ban the funds.
I have never supported Davis and have given money to both of his
opponents, Ken Lucas and Nick Clooney. I lauded Davis, however, for
showing leadership on issues involving soldiers.
I now retract those statements. As John Cheves noted in a recent
Lexington Herald-Leader article, there is legislation in front of
Congress to limit payday lenders to 36% in interest when they lend
money to soldiers. Davis is trying to stop it.
Payday lenders are big contributors to Congressman Davis’s campaign.
As bad as the contractual mutual funds are for military people, payday
loans are worse. A Defense Department report criticized the payday
industry and said that payday loans cost soldiers from 390% to 780% a
year.
Wow!
Payday lenders say they can't make money charging 36%. Can you think of another business that would whine about a 36% limit?
When I grew up in the Northern Kentucky area that Davis represents in
Congress, some cities were controlled by the Mafia. The mob had a term
for 36% interest rates: loan sharking.
In those days, charging 36% would earn you a swim in the Ohio River with a cement overcoat attached.
If a loan shark had charged 390% to 780%, not only would they have
wound up in the river, someone would have thrown all their friends and
relatives in too.
Now lenders like Check’n Go are “legitimate” (meaning legal)
corporations, and their employees can donate huge amounts of money to
politicans. So far, they have coughed up $11,450 for Davis.
Davis, corporations taking advantage of soldiers, and payday loans are a perfect storm of things that plague America.
I'm angry about people continuing to rip off soldiers and military
people. Thousands of soldiers are deployed to foreign countries, and
some come back in body bags.
It is un-American to let big corporations rip them off.
When I wrote about Fidelity Investments selling contractual mutual
funds, I suggested that Peter Lynch, Vice Chair of Fidelity, be sent to
Iraq in place of a soldier who purchased one of his funds.
In addition to sending Lynch, I now want the payday lenders and Congressman Davis to make the same trip.
Yet as much as I want to blame everything on Lynch and the payday
people, you have to wonder why military people can’t steer clear of
them. The American education system has fallen flat in teaching
financial literacy.
Cheves said that roughly 17% of servicemen and women use payday loans.
That is an incredibly high percentage, and military people need to know
about better options.
Like pawnbrokers. Even those are better than payday lenders.
The situation with Congressman Davis is a clear example of why campaign
finance reform needs to be implemented. I’m not sure what to do, but
there really is a problem.
Davis is a graduate of West Point. When he proposed a bill to ban
contractual mutual funds, I thought he was someone who cared about his
fellow soldiers. It doesn’t look like it now.
Like most politicians, Davis is going to listen to his biggest
contributors. Even if they are payday lenders who target military
people.
For $11,450, you can get the ear of a congressman. Soldiers and people
lined up at payday loan offices don’t get that same kind of attention.
The question is ‘How much should soldiers have to give for our
country?’ To Congressman Davis and many like him, the answer seems to
be more, more, more.
Don McNay is the author of “The Unbridled World of Ernie Fletcher” and
Chairman of McNay Settlement Group. His award-winning column is
syndicated on the CNHI News Service. You can write to him at
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
or read other things he has written at www.donmcnay.com.
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