Lawsuit echoes deeper economic flaws

As recently reported by the Arkansas News Bureau, Attorney General Dustin McDaniel’s office sued a Texarkana pawn shop Monday, alleging it charges excessive interest rates on auto-title loans in violation of Arkansas law.

The lawsuit, filed in Pulaski County Circuit Court, alleges Tri-State Pawn of Texarkana Inc., assessed illegally high interest rates — equivalent to 240 percent annual rate — on auto-title loans made in the state.

As the report clarifies, an auto-title loan, known as a title pawn, is a short-term, high-interest loan in which the borrower provides the lender with the title and a key to his or her vehicle as collateral for the loan while the borrower retains possession of the vehicle.

“These lending practices and those similar, such as payday loans, are unfair and unconstitutional,” McDaniel’s office said in a press release.

Bill Duffer, owner of Tri-State Pawn, said he was not aware of any legal action against him.

“I didn’t know that I was being sued,” Duffer told the news bureau. He added, “no, sir” when asked if the allegations were true.

Without speculating on the putative merits of the attorney general’s case, issues like these could — and should — be precluded by law. In short, no concern, be it pawn shop, payday lender, mortgager or credit issuer of any kind should be permitted to engage in usury.

At a time when the federal government is content to lend banking leviathans at sub-one percent rates, Congress is prepared to shackle U.S. students with ever-higher educational loan interest rates.

Further down the food chain, businesses whose primary clientele exist on the frailest of economic margins require especially close monitoring. It is after all, easiest to mistreat those who have the fewest resources to gird against dubious business practices.

To be certain, many of these businesses provide services that facilitate the conversion of meager assets to needed cash. Perhaps then, the larger question becomes why such services are necessary in the first place.

All complex societies have people who are poor — those who exist on the aforementioned margins. This is a fact of economics and history. This is a sad aspect of human existence not likely to abate. Even so, the imbalance can and should be minimized. To do otherwise is to devalue human life — to place lives on a tilted balance sheet.

While we don’t advocate the metaphorical throwing of the money lenders out of the temple, we do question why certain dubious practices and gross inequities persist. When the “Too Big To Fail” crowd that facilitated the cataclysmic recession of the last decade largely managed to keep their wealth, position and power, it should have stirred something greater in America than a few well-meant, but ineffectual “occupy” encampments.

Of course the reason broader rebellion didn’t foment is more an artifact of immediate of personal tragedy than anything else. In other words, you’re less likely to worry about robber barons lighting cigars with T-notes when your own home is in foreclosure.

In short, a lucky few have been christened too big to fail — the economic equivalent of a papal special dispensation. For everyone else, there exists no such golden safety net, just the cold hard ground of being small enough to forget.