Wednesday, December 16, 2015

The Wonderful 2nd Circuit Madden v. Midland Ruling

When the hegemon's minions speak of usury, they mean a violation of interest-rate limit laws, not usury.  The 2nd Circuit threw a monkey wrench into the works, accidently doing the right thing ina small way, and this case is now headed to the Supreme Court.  There is a use for courts in capitalism, and that is for free-market people to take a look at what is being argued and see the reality of the game. In this case:
The usury element holds special significance for the likes of Lending Club, Prosper and Avant, all of whom use WebBank to originate their loans. That relationship, as FT Alphaville previously noted, is why WebBank’s is name on the $28,500 loan to Syed Farook and not Prosper’s (or Citi’s, who the Wall Street Journal revealed as the ultimate buyer of the loan, since sold back to Prosper).
It is by renting WebBank’s bank license that those marketplace lenders are able to make loans that would otherwise be usurious in states with caps on loan interest rates. For example, on a call with analysts in August, Lending Club chief executive Renaud Laplanche said that around 12.5% of all its loans are made at rates above local state usury caps.
The question as to whether or not a company like Lending Club or Prosper is acting on behalf of a national bank like WebBank is crucial, as noted by Fitch Ratings’ in its review of the current Citi-sponsored securitisation of Prosper loans (coincidentally the intended destination for Farook’s loan.)
The fact that WebBank originates the loans and holds them for one day before selling them to Prosper, which, in turn, sells the loans to institutional investors, raises the question as to which entity is the true lender.
And note the point is to write up as many of these junk loans and sell them off to pensions.  Your pension.  And when it all goes bad, who is responsible?  Why, no telling.  Imagine that.  With all of the banking regulation we have at the town, county, state and federal level, we have people who cannot be traced making billions lending "money" that does not exist to people coerced into avoiding tax burdens into investing in "securitized notes" sold by people specially licensed by the hegemon.  When the next crash comes, and these notes are worthless, the hegemon will do nothing except seize the rest of your assets "to save them from the speculators."

And people say deregulation was the problem in 2008!

The only safe way out of this mess is a complete deregulation of our economic system.  Then in a free market none of these things can get out of hand (they will happen, but not be blown to such disastrous heights do to hegemon regulation.)  Some greedy people will get burned and live and learn.  Today, the honest and earnest, the hardworking and productive, all get burned like saps.

The article cited is on another topic, completely obtuse to the import of the court case.  The article is well worth a read, talking about, gee whiz, what will happen when (if) the Fed raises interest rates.  Probably nothing much.  Despoilment is baked into this cake, and usually something irrational brings it down, not what everyone is looking at.  But the article is otherwise well worth reading.

Update before I could even post:
We’re not sure which of those categories “jihadist massacre” falls under (we assume “special occasion”), but as Reuters reportsSan Bernardino mass shooters Syed Farook and Tashfeen Malik, obtained a $28,500 loan through Prospernot long before killing 14 and injuring nearly two dozen in a bloody rampage last Wednesday.
A loan is ethically always a charitable event.  It is creative and unitive.  Making them a business event is destructive and polarizing.  Look at all of the polarization and destruction since we began allowing banks to lend credit at interest.  This example is astonishing.

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