What’s the difference between loan shark and Madoff?

Tue Jun 23, 2009 | | Posted in Finances Beware



Good old Bernie has not been convicted so let me rephrase the question. “What’s the difference between a loan shark and a thieving capitalist?” Some columnists writing on personal finances call a loan shark a mobster and a thieving legitimate lender a capitalist. Some are extremely respected columnists. But, as a consumer, I have to disagree.

Most consumers, I reckon, would not use the words legitimate and thieving for the same person or establishment in the same sentence. They ought to be mutually exclusive and we must treat both as having separate characteristics. We are all humans and, as such, we have known only humans can be legitimate or (but not and/or) thieving anything – capitalists or not.

A legitimate lender cannot be a thieving lender. On the same token, a thieving lender cannot be a legitimate lender. It has been said many times that Washington treated capitalist sharks as role models and beloved campaign contributors – that is, until the economy collapsed and debtors (aka voters) emitted a collective scream.

If the “thieving legitimate lenders” are called capitalists, then where was the law to make them stop thieving? Many columnists have written that

• No law required the recall of the exploding mortgages that drove tens of thousands of borrowers into foreclosure and bankruptcy.
• No one recalled the dangerous subprime credit cards that arrived in the mail already loaded with high-rate debt from application fees.
• Under double-cycle billing on credit cards system, you were charged interest on debt that you had already paid off in the previous month. You didn’t owe the money anymore but were charged interest anyway. Double-cycle billing was disclosed in the fine print but few consumers understood it. Once they did, public anger – plus, finally, Congressional action – put a stop to it.
• Last month, President Barack Obama signed the Credit Card Accountability Responsibility and Disclosure Act, which will end some of the abuses in the credit-card business.

In a Nutshell
No matter what you call these capitalists, in my opinion, they are all schmucks of the worst kind or according to Steven Spielberg at least the third kind. Let’s hope the new law, starting in the middle of next year, put an end to the artistic works of the schmucks. In the mean time, may God bless us all and protect us from the anacondas of the financial world with their fat and swollen bellies all around us, squeezing and choking us.

Legislative action always comes long after the schmucks have their say or do and the damage has been done. And it can’t anticipate what sharkish product the financial industry will dream up next.

What do you think?

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Information contained herein is general in nature, and is provided for informational and educational purposes only. Past performance is no guarantee of future results. Talk to your financial adviser.

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