Mark Warner's "Capitalism 2.0" Is Usury

It is not news that the Democrats are having trouble agreeing upon a clear and convincing message for 2018, but they keep reminding us anew each day. See, for example, the answer one prominent Democratic senator, Mark Warner, gave today when asked what the party’s “elevator pitch to millennials” is:

Capitalism 2.0? What is that? Never mind that a majority of millennials say they reject capitalism. Never mind that that means literally nothing.

Let’s imagine that Mark Warner wakes up tomorrow morning and says, my God, did I really say “Capitalism 2.0” in front of everyone? That wasn’t a nightmare? And let’s say the other Democrats all say, yes, you’re right Mark, you fucked up and we all fucked up, let’s settle on a clear message that everyone will love. Let’s go with: We’re for the people and not the big banks! Main Street not Wall Street! Polling shows you pretty much can’t be mean enough about Wall Street to voters: One poll by Americans for Financial Reform found 91 percent of Americans say it’s important to regulate financial services, and 78 percent say Wall Street should be “held accountable with tougher rules and enforcement.”

But Mark did not make some sort of terrible mistake when he suggested a colossally stupid message like “Capitalism 2.0.” He isn’t just saying stupid shit: He’s trying to pass a bill that would allow payday lenders to fuck over working people.

The bill would allow payday lenders to “ignore state interest rate caps on consumer loans as long as they partnered with a national bank,” according to HuffPost’s Zach Carter. Payday lenders are limited by interest rate caps set by the states—a number of states have a cap of 36 percent, but fifteen states have no cap at all— whereas national banks are only limited to the interest rate in the state they’re based in, rather than the lender. Warner’s bill would change all this, by allowing payday lenders who partner with a national bank to charge whatever interest rate is allowed by that bank’s home state.

Warner’s argument is that this is actually a good thing, because it will allow more people to access credit, which is, by the way, exactly what scummy payday lenders say about themselves. The Community Financial Services Association of America, for example, actually claims that “anti-payday lending activists seek to limit the already small number of short-term credit options available and tighten consumer access to credit.” Which would be a weird thing to want to do, really.

Warner is a big fan of “fintech,” which basically means financial services that are available through Apps and are therefore Cool, and fintech lenders would be big winners from Warner’s bill. LendingClub, a “peer-to-peer” or P2P lending company offering loans directly from an investor, “insists it will not be able to help people lower their credit card bills if they have to abide by state usury caps,” according to Carter. Peer-to-peer lending is supposed to help borrowers who have high debt and low credit scores, but a study released by the Federal Reserve Bank of Cleveland last week indicates that might be a load of shit. Their results “suggest that the credit scores of P2P borrowers fall substantially and delinquency rates rise after taking on a P2P loan (figure 4) compared to non-P2P borrowers.”

Regardless of Warner’s spin, it’s pretty clear that allowing payday lenders to participate in a race to the bottom by participating in “rent-a-bank” schemes to charge the highest interest rates possible is not good, as over 150 community and social justice organizations argued in a letter sent earlier this year. Nor is it something that would encourage voters to trust the Democratic Party, which is currently at its lowest approval rating in 25 years.

If the Democrats want to reassert themselves as a party for the people instead of just Not The GOP—and they should want to do so—they cannot do it while also actively supporting usurious interest rates on loans to poor and working class Americans.