Consumers Spared As Liberal Provisions Fail To Make Coronavirus Rescue Package

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Consumers who need access to credit during coronavirus crisis and other emergencies faced a very close call this week when some in Congress tried to sneak a provision into the COVID-19 economic rescue package that would have limited options for consumer cash and credit at the worst possible time. Policymakers who understand the devastating impact so-called rate caps have on workers and families ensured the coronavirus rescue package did not include one.

While consumers were spared for the moment, as Congress considers additional initiatives to rescue the U.S. economy, it’s clear Speaker Nancy Pelosi and House progressives will not, to paraphrase Rahm Emanuel, let the global COVID-19 crisis go to waste.

Speaker Pelosi and her followers doubled down on legislative proposals full of billions of dollars of handouts and subsidies, despite intense criticism for their previous bloated, bailout-rich coronavirus “relief” packages, now known as #coronapork. Members of Congress, analysts, watchdog groups and many others sounded the alarm about giveaways to special interests and progressive pet projects such as the Green New Deal, the USPS, student debt forgiveness and financial “reform” wish list items that would hurt the very consumers their supporters claim they want to help.

I wrote last month about how the American public is being deceived into supporting leftist consumer lending policies under the guise of “military and veteran protections,” and true to form, House Financial Services Committee progressives tried unsuccessfully to sneak this pet financial services initiative into the COVID-19 response package. Senate Banking Democrats proposed a “Coronavirus Relief” 36 percent rate cap on all consumer loans, while the House version would cripple non-bank lenders by prohibiting them from collecting money from borrowers for months.

California has been one of the hardest hit states in the nation with the coronavirus. Thousands of COVID-19 cases have been confirmed and dozens have tragically died. Unfortunately, for consumers in the Golden State, a new state rate-cap law went into effect earlier this year that will severely restrict their access to credit at one of the worst possible moments. With government-mandated stay-at-home orders, a majority of employers are banned from opening their doors, and workers ready and able to work are banned from working.

There’s no question these orders will save lives – which is and should be our first priority. But what about the families facing economic hardships through no fault of their own? Due to the California legislature’s ill-advised, and now ill-timed, rate cap law, Californians have fewer options to get the credit they might need for rent, food, utilities and other essentials to weather the coronavirus storm.

California policymakers aren’t the only ones making bad decisions for their consumers. Virginia and Ohio have also passed or are close to passing rate cap laws that would make scarce credit access even scarcer in these states. Congress should not follow in their footsteps now or after American life and our economy recovers. Even before the coronavirus crisis, reports showed 40 percent of Americans did not have funds to cover a $400 emergency. Now the emergency is greater than any of us could have imagined, and consumers in some states have fewer options to meet the credit challenges it has created.

Make no mistake – it appears that we are headed for a recession or worse. Restricting access to credit will exacerbate the financial impact of an economic downturn for millions of American families. Now is not the time for back room deals and special interest giveaways. Now is the time for real solutions. Restrictions on access to credit would decimate the innovative non-bank financial institutions that are built on the notion of providing financial services to all Americans, regardless of socioeconomic status or credit history.

As Congress considers additional coronavirus relief packages, it is critical to resist any attempt by progressive liberals to write themselves and their donors a blank check for a of social and corporate reforms that have nothing whatsoever to do with America’s unfolding medical and economic crisis. Now is the time for everyone, regardless of their political party, to exhibit leadership and restraint to resuscitate the economy, create jobs, and save lives.

Copyright 2020 Ray Haynes, distributed exclusively by Cagle Cartoons newspaper syndicate.

Ray Haynes is a former California legislator and served as National Chairman of the American Legislative Exchange Council. Haynes can be reached at [email protected]

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Service Members Being Hurt By The Law Designed To Help Them

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President Bush had the best of intentions when he signed the Military Lending Act (MLA) into law in 2006, capping the fees that banks and other businesses can charge when lending to service members and their spouses. After all, who wants those who have put their lives on the line for this country to be exploited by unfair lending practices?The MLA was supposed to protect them from exploitation, make borrowing more affordable to our service members and their families, and limit the bad actors in lending.

It has not worked out as planned.

In fact, borrowing has not become more affordable for military members and their families. The update in 2014, which added further restrictions on military lending, simply compounded the difficulties that service members were facing under the law.

Harris Insights polling has found that between 2014 and 2019, the percentage of military personnel suffering financial distress more than doubled, from 16 percent to 34 percent. The number of military bankruptcies or bankruptcies under consideration, rose from nearly zero to 40,000 between 2014 and 2019, and the number in financial difficulty increased from 40,000 to 200,000. Only about 63 percent of respondents “paid all their bills on time” in 2019, compared to 83 percent in 2014. Eleven percent have debt in collections in 2019, compared to three percent in 2014.

Under the MLA, lenders are prohibited from providing service members with some of the most flexible and accommodating forms of alternative credit. As a result, the number of financial services companies operating near military bases and serving military families has dropped. These companies are not vultures – they simply give service members more options, options that are no longer available.This has left many people in “credit deserts,” without the credit upon which they formerly relied.

And this hurts both the service members and the services.A 2017 West Point Military Academy study found some evidence to indicate that having access to a diversity of credit options may decrease “the probability of being involuntarily separated from the Army by ten percent.” The MLA eliminated that diversity.Without that diversity of options, service members cannot find a workable method to get out of financial trouble, and that leads to adverse consequences for the member and the service.

According to the federal government’s National Security Adjudicative Guidelines, excess debt and the inability to repay debts can prevent service members from being deployed:

“Failure to live within one’s means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual’s reliability, trustworthiness, and ability to protect classified or sensitive information… An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds.”

Out of necessity, service members have been forced to take alternative measures that aren’t covered by the MLA. A senior military official has been quoted as saying, “Overdraft programs have replaced payday lending as the leading financial problem for military personnel.” Lack of competition from payday lenders leads to abusive practices by other lenders.This same senior official has also said that some financial institutions are now engaged in “predatory or punitive overdraft practices.”Service members, however, now without options, are forced to accept these practices to avoid adverse consequences to their military career.

Congress has created a doubly negative situation – inequality for service members in terms of the policies governing their credit options, and inequality in terms of the outcomes for their financial well-being. Congress cannot, and did not, legislate away the need for credit.

Some members of Congress have proposed legislation, HR5050, to extend provisions of the MLA to the Truth and Lending Act, which would affect all borrowers – not just service members and their families. The legislation would preempt the consumer credit laws of 43 states, including California, Ohio, Texas, Virginia, and Washington, and put many families’ finances in peril. This is the wrong approach.

Instead of extending the MLA to the Truth in Lending Act, the MLA itself should be reformed – not only to help service members, but also to stop hurting them.

Copyright 2020 Ray Haynes, distributed exclusively by Cagle Cartoons newspaper syndicate.

Ray Haynes is a former California legislator and served as National Chairman of the American Legislative Exchange Council. Haynes can be reached at [email protected]

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Republican Worry Points for 2020

Every good politician or political consultant, when they go to the media, goes with a set of “talking points” to put the best spin on a story coherently.

The talking points for Republicans following this last election have been “Trump is in good shape in 2020, Republicans took the Governors’ offices in Ohio and Florida, both ‘must win’ states if Trump wishes to retain the Presidency in 2020. “While I agree, instead of talking points I think Republicans should have worry points – matters of concern for 2020 if we wish to retain the Presidency.

First, lets recap 2016. Trump wins the presidency by winning Florida and Ohio, the “must win” states, but those two were not enough. Had Trump just won those two states out of all the battleground states, he would have ended up with 238 electoral votes (subtracting Iowa, North Carolina, Pennsylvania, Michigan, and Wisconsin). Interesting fact, Trump won Pennsylvania, Michigan and Wisconsin by a combined total of 86,000 votes. If 43,000 people had changed their mind, the U. S. would have had President Hillary Clinton.

So… what are the worry points? Republicans must win Ohio and Florida, plus Iowa and North Carolina, and at least one of the Michigan, Wisconsin, or Pennsylvania group to retain the presidency. Based on this election, the other battleground states – Nevada, Colorado, Virginia and New Hampshire – seem to have fallen rather securely into the blue column.

First, Florida. The Republican governor and U. S. Senate candidates seem to have won by 50,000 and 30,000 votes respectively. Trump won Florida in 2016 by 113,000 votes, so 2018’s results are a significant fall off for Republicans. But that is only half the story.

In this election, Florida voters gave 1. 5 million convicted felons the right to vote. Combine that with the 1 million Puerto Ricans that have moved into Florida over the last 3 years, a migration accelerated by last year’s hurricane, and Florida is looking at a pool of 2. 5 million new potential voters. Puerto Ricans register 65 percent Democrat in Puerto Rico, and I don’t think convicted felons are a target demographic for Republicans. These groups register and vote, and Republicans have a decidedly uphill battle to win Florida’s 29 electoral votes in 2020.

Yes, Republicans won the governorship in Ohio, but they lost the Senate seat. Ohio is still a battleground state that can go either way.

How about Michigan, Wisconsin, and Pennsylvania? We have witnessed two years of absolute social turmoil by Democrats for the sole purpose of changing the minds of 43,000 people. The result? The Democrats swept the governor and Senate seats in all three states by wide margins. The “social turmoil” strategy worked, so look for more of that over the next two years. The Democrats have an easy target – keep those 43,000 people that voted for Democrats in this election by whatever means necessary. We will see investigations, allegations and instigations galore. They worked when the Democrats were in the minority, imagine how much better will they work when they control at least one house of Congress.

Republicans should also be worrying a great deal about the close results in the traditional red “flyover” states of Texas, Georgia and Arizona (where Democrats flipped a Republican seat). The traditional “blue wall” that Republicans faced from 1988 to 2012, but breached by Trump in 2016, seems to have been reconstructed.

Republicans are in real trouble for 2020, and ought to consider these “worry points” and how to overcome them. The traditional “winner take all” rule of selecting presidential electors is not serving us well, and we need to rethink our strategy. Republicans leave a lot of votes behind in the flyover states in the South and Midwest, and there are a lot of Republicans behind the “blue wall” that think, rightly so, that the Republican Party doesn’t care about them. Getting behind a strategy that makes those votes count, and is directed at turning out those votes, may not “guarantee” the Republicans a win in 2020, but it will not leave us with so few options, as the current system seems to have done.

We now have our worry points. Now we just need a solution to overcome them.

Copyright 2018 Ray Haynes. Distributed exclusively by Cagle Cartoons newspaper syndicate.

Ray Haynes is a former California legislator and served as National Chairman of the American Legislative Exchange Council. Haynes can be reached at [email protected] com.

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