The 300% Loan

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


The Wall Street Journal reports today that payday lenders are increasingly incorporating not in states with lax lending laws, but with American Indian tribes:

Because of the sovereign immunity granted to tribes by the U.S. government, they are shielded from interest-rate caps and other payday-loan regulations. Tribal lenders can even lend in the 12 U.S. states where lawmakers have kicked out the rest of the payday-loan industry.

….All it takes to make a deal are a willing tribe and an eager payday lender. The lender usually incorporates on tribal land, agreeing to pay the chief a salary of a few thousand dollars a month, according to people familiar with the agreements. Such payments can balloon if the tribe has relationships with more than one lender, a common practice.

Most payday lenders have no physical presence on tribal land. To go into business with a tribe, they typically start making loans in the tribe’s name from the lender’s existing call center, according to industry consultants.

In October, Peg Calvird of Suffolk, Va., got a payday loan for $600 from American Web Loan Inc….The loan’s interest rate was 300%, far above Virginia’s legal limit of 36%.

For now, I’ll assume that credit card companies can’t do this, since if they could they already would have. Let’s just hope that the financial reform law didn’t accidentally open up a loophole that makes it possible.

But here’s a serious question: if you take out a payday loan from one of these guys, and then fail to pay it back, what can they do to you? I suppose they can still wreck your credit rating, but what else? Aside from harassment, what enforcement mechanism is available to them to get their money back?

THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

payment methods

THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate