I know it’s hard to get South Dakotans to see a connection between ballot measures and candidates. It’s hard to get South Dakotans to see that Donald Trump is bad for South Dakota.
But hey, South Dakota: in 2016, at the same time that 61.5% of you voted to make a spoiled Manhattan billionaire and TV star your President, 75.6% of you voted for Initiated Measure 21 to cap payday loan interest at 36%. More of you hate the lies and abuses of the payday loan sharks than hate Hillary Clinton.
Now Donald Trump is revoking that 36% rate cap by executive fiat:
Donald Trump’s finance czars had another idea. In November, the Federal Deposit Insurance Corporation (along with the even more obscure Office of the Comptroller of the Currency) floated a permanent loophole for payday lenders that would essentially make the South Dakota law, and many others, moot—they could launder their loans through out-of-state banks, which aren’t subject to state caps on interest. Payday lenders arrange the loans, the banks issue them, and the payday lenders buy them back.
…The FDIC rule would override a 2nd Circuit ruling, Madden v. Midland Funding, that says state usury laws can follow a loan around even if they’re sold to an out-of-state buyer. The FDIC rule is based on a controversial doctrine called “valid-when-made”: As long as a loan starts out legit, the bank can sell it on, with the same interest, to anyone. If the bank lends you a dollar at 1,000 percent interest—a real rate that payday lenders actually charge—and they’re not bound by the state rule, anyone can buy that loan from the bank and keep charging that 1000 percent. According to the National Consumer Law Center, which calls the FDIC rule the “rent-a-bank” proposal, at least five FDIC-regulated banks are now facilitating ultra-high-interest loans in 30 or more states. The motivation is obvious: The banks get a cut of a hugely profitable business [Daniel Moattar, “Trump to Payday Lenders: Let’s Rip America Off Again,” Mother Jones, 2020.02.11].
This dirty trick would allow Chuck Brennan and other unscrupulous usurers to come back and abuse South Dakota. They couldn’t just open up their loan-shark shops on their own; they’d have to partner with the big banks who’ve been lobbying for this lucrative opportunity and give them a piece of the action. But half a pie is better than no pie and would still let Brennan et al. get back into charging vulnerable South Dakotans triple-digit interest.
Such is the reward an industry gets when it spends about a million dollars on conferences at Trump properties. Reciprocal back-scratching for rich sociopaths who subvert the will of the people—the rent-a-bank scheme captures Trumpism perfectly.
In a rare instance of standing for South Dakota against Trumpism, Attorney General Jason Ravnsborg signed onto a letter with the A.G.s of California, Minnesota, New York, and 18 other states opposing the rent-a-bank deregulation as an illegal preëmption of state law and usurpation of Congressional authority (although casual penmanship analysis shows his signature conveys the least vigor and character of the bunch).
The U.S. House Committee on Financial Services held the first of two hearings on the rent-a-bank schemes Trump would foist on the states last Wednesday. The committee will hear more on the issue on February 26. There are various bills pending in Congress that would check Trump’s loan sharks and make South Dakota’s 36% rate cap national. Neither Dusty Johnson, John Thune, nor Marion Michael Rounds have signed on yet as cosponsors of these useful reflections of South Dakota values.
The rent-a-bank scheme is just the latest in a string of examples of Donald Trump working against the interests and values of the South Dakotans who proudly buy his crap. At what point do South Dakotans wake up from their (white) nationalist fantasy and realize that electing a New York City con man to run the country is the opposite of what South Dakotans really want?