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. Although Meyers appeared somewhat less than professional in the manner in which he referred to Eskow as a “simple child,” the exchange does raise some very good questions about some of the recent claims Mr. Eskow makes in his Huffington Post article “Usurious Payday Loans: Myths, Flawed Studies, and Solutions.” Much of Eskow’s criticism of the payday loans industry seems to center on how the industry allegedly targets and exploits the poor and minorities. However, as we will see, one who lives in a glass house should not throw stones.
Richard Eskow’s relationship with the World Bank
Bear in mind that Richard Eskow shares very close ties with the World Bank. The World Bank, according to the World Bank’s Articles of Agreement, aims 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.
World Bank faces much criticism for the loans originated by them. For example, Bretton Woods points out an example in which hydroelectric dams were funded and constructed despite the high probability it would displace indigenous people who inhabit 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 is somewhat bizarre that Eskow supports this, because towards the end of his Huffington Post rant, he seems to believe that it is actually a good idea to allow states to make their own decisions regarding payday loans. But only moments before, he proposes that Congress form its own agency to regulate payday loans out of business. Eskow seems to bear conflicting opinions over payday loans and other financial matters, if not all-in-all hypocrisy. But let’s consider the mean of his argument against payday loans, which is of primary interest.
Eskow says payday loans ‘exploit helpless people’
This is an argument that the pro-big bank establishment has used for years. Many with religious twists go so far as to align payday loans with usury, which is far from the truth. Excessive and unlawful charging of interest is what usury amounts to. Payday loans do not reflect or qualify on either of those counts, and hence do not go well with the concept of usury of Eskow. 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 says that pro-payday loans studies are often funded (at least in part) by pro-payday loans associations.
At worst, these two things could cancel out each other. 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 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.
