President Donald Trump is disingenuously citing “states’ rights” as the justification for his efforts to dismantle Obamacare.
If he was really committed to states rights, Trump would be dismantling the “emergency” measures enacted in the early 1980s to allow banks to charge more than 11 percent interest per year. That’s still the cap on many of the individual state usury laws they undermined.
Banks could not profitably make loans under the caps in 1979 and 1980 because inflation had surged to more than 12 percent. Which is why emergency measures were needed at the national level.
The problem is that the measures remained the law of the land after the emergency ended and inflation receded, permanently superseding each state’s right to cap their own interest rates as they saw fit.
Hence the term “states’ rights.” Meaning a state’s ability to make laws crafted to their own individual needs and wants. Instead of being forced into the kind of one-size fits all federal solution that’s such a problem for border states when it comes to illegal immigration.
Some state rights are a good thing, like usury laws. Some are not, like slavery.
Political hookers make those distinctions irrelevant by rolling out the term solely to manipulate the electorate, instead of informing it.
Banks were accustomed to charging 11-12 percent before 1980 and clearing 7-9 percent in interest payments after inflation. The high inflation climate of the time turned that margin between interest and inflation negative. Meaning that the rate at which the dollar was losing its value exceeded what lenders could charge borrowers.
Lenders who charged higher rates back then were called “loan sharks” and “shylocks.” Today, they’re called “bankers.”
Inflation is now only about 1-3 percent a year, but bank issued credit cards with annual interest rates of 29 percent or more are common. They give lenders margins of more than 26 percent after inflation. About three times what they once enjoyed.
Those out-sized margins are just for normal cards. There are credit cards featuring rates as high as 79.9 percent and payday lenders charging rates that exceed 900 percent a year.
A disastrous 1978 U.S. Supreme Court ruling cleared the way for this crime against the American people. It’s called Marquette National Bank of Minneapolis vs. First of Omaha Service Corp.
The ruling allowed banks to charge interest rates across the nation without regard to the individual state usury laws which previously controlled them. The only requirement was that lenders comply with the rates established by the states where they were legally headquartered,
Nevada, South Dakota and Delaware dropped their rate caps, and invited banks to relocate to their states and begin exploiting their fellow Americans. By doing so, they opened the door to a boatload of predatory lending practices so abhorrent to decent people that they were once the province solely of loan sharks.
The ruling necessitated the passage of new federal legislation to protect each state’s right to govern the interest rates charged within its borders. However, that legislation was
never passed by a Congress being hijacked by big bank bribes and political donations.
Which is how the banks put the loan sharks out of business, took over their business, and became parasites on their fellow Americans. And how Congress went from representing the American people to representing the banks that rule us.
Don’t look for these open sores in our society to be fixed under the venal Trump Administration.
Because no one pays him off for doing the right thing.
As for the idea that this draft dodger is a principled champion of either his fellow Americans or the concept of states rights… I think not.