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USATODAY.com - Pentagon sees risk in troops' loan debt

We're seeing a growing trend of folks who are not eligible to deploy because of financial problems," says Capt. Mark Patton, commander of Naval Base Point Loma in California. Patton says debt problems can cost some servicemembers their security clearances. The report says "payday loan" stores (so named because their loans are often due on a borrower's next payday) have sprung up by the thousands around military bases and elsewhere in the past decade.

Lenders typically charge $15 to $25 per $100 loan for two weeks, and most loans are extended for several weeks. The report says the average loan is $350 and has an annual interest rate of 390% to 780%. The average borrower, it says, pays back $834 for a $339 loan.

The report cites estimates 13% to 19% of servicemembers — at least 175,000 people — took out high-interest, short-term loans last year. It said nine out of 10 loans go to borrowers who take out five or more over a year...

That's a misguided critique of a valuable service, says Darrin Andersen, president of the Community Financial Services Association of America, the payday lenders' trade group. The Pentagon, he says, "is in over its heads when it comes to ... complex personal finance and lending issues."

Andersen says the industry does not target military personnel. He says the trade group's members have more than 15,000 locations around the country.

The Pentagon report says those stores "are heavily concentrated around military bases." It says they could be found in heavy numbers around Camp Pendleton, Calif.; Fort Campbell, Ky.; naval installations at Newport News and Norfolk, Va.; and McChord Air Force Base and Fort Lewis in Washington.

Assholes.

The Pentagon is muy screwed up when it comes to pay, in lots of ways. But these Payday-loan guys are opportunists, predators preying on troops–and wives–who are boxed in. Visualize the goat-on-a-rope T-Rex bait in Jurassic Park.

Now, speaking of Invisible Hands, Dinosaurs, and shilling for financial services, mine aren't totally clean (see left, hear below.)

But, as I peddled loans and checking accounts and struggled to explain in "friendly, approachable" campaigns to little old ladies in Indiana or Texas why their favorite bank teller was being eaten by a monster from Cleveland or Atlanta and not to fret, a lucky thing happened. I got a new boss who could smell a crap balance sheet at 3 miles while quoting Adam Smith chapter and line. The lucky part? He told us peons to go read Smith's Theory of Moral Sentiments, not the Wealth of Nations, if we wanted to get the *point* of business and what we were there to communicate. Being marginally able to take a hint, some of us did. Some read both.

Holy Community Reinvestment Act, Batman! Turns out, like lots of things in my trade, the boldest and most certain Smithisms I'd had quoted at me always contained pretty powerful and inconvenient caveats. Smith didn't trust certain humans (okay, business folk) to do the right thing with his ideas. Yeah, Smith wasn't the Gordon Gekko of the 1770s. He gets spun like Jefferson, Gandhi, Churchill, RFK or "In God We trust" gets spun. Take it away, Mr. Smith...

Adam Smith, The Wealth of Nations

The rise of profit operates like compound interest. Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people. (Book One - Ch.9)

To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.(Book One - Ch 11)

Newsflash: Grunts are Labor, not management. And it shows.

Happy Labor Day!