Pining for the good old days of vigilant government is not always misplaced nostalgia.
For a half-century, you could count on the state of Arkansas to protect people, particularly the unwary, from loan sharks.
Arkansas had the toughest usury law in the land — even a mite over 10 percent interest was unlawful — and every time a lender would concoct a way to skirt the constitutional limit, the Arkansas Supreme Court would strike it down and order the lender to double the borrower’s money back.
That happened for the nearly 50 years that Justice George Rose Smith was on the court. He usually delivered the court’s stern opinion, which was that whatever clever name you called a lending fee, it was interest.
Justice Smith has been gone for more than a decade, and the state is a haven for predatory lenders. Payday lenders now fleece the desperate at interest rates of 300 percent or more.
Millions of dollars are sucked from the pockets of the working poor and out of the state.
The legislature authorized check cashers, gave them pretty much carte blanche and refuses to correct its mistake. The governor and attorneys general have for several years looked the other way. The Supreme Court, sans Justice Smith, temporizes. The state agency that is supposed to regulate the lenders shrugs and asks, what can we do?
It was at work again this week. Representatives of 20 groups appealed to the state Board of Collection Agencies to enforce the law and an admittedly fuzzy court mandate and require the surety company of a payday lender to pay a $191,000 judgment against the lender to customers whom it had fleeced. The executive director of the board did not think it had the authority under the law to do that.
The case is complicated — purposely and needlessly complicated, we think.
The circuit court in Pope County ordered the surety company for the lender, Russellville Check Express, to release its $50,000 surety to the people who sued the check company, which loaned people money at stratospheric rates in exchange for which people would turn over their next paycheck. The Supreme Court overturned the judgment because the plaintiffs had not first gone through the board of collection agencies to get relief.
So they were back before the board this week to do that. It was clear after a short hearing that it would be futile.
An attorney for the surety company, standing in for the absent check casher, said that the company did not have to pay because the court had not said flatly that the lender had violated the law. The board ruled unanimously against the customers two years ago and it seemed unimpressed by their argument this time. It will hold another hearing sometime.
Paul Kelly of Arkansas Advocates for Children and Families urged the board to rule for the customers and make the company and its insurer pay a price for violating the usury law.
Afterward, he said he expected the board to rule for the lenders. “We just want them to sweat and know that people are watching them,” he said.
George Rose Smith is dead, the Supreme Court is changed, and the law has been weakened. But society seems to have changed, too. Government is no longer the tribune of the poor and of working people, as we see almost weekly in the decisions on workers’ compensation and the shrinking power of people to sue over corporate neglect and abuse.
Jesus was only having a bad day when he threw the moneychangers from the temple. What he surely meant to say was caveat emptor.
