Hot Take: If We Crack Down On Payday Lenders, The Terrorists Win

"Nice country you got here, be a real shame if something happened to it."

There are any number of ideas that might flow forth from the words, "in the wake of tragedies in San Bernardino and Paris." Calls to action. Expressions of courage. Something that knits up our sleeve of worry, or binds us together as human beings.

And, of course, the tragedies might serve as the motivator of ideas and opinions, some of which would necessarily be better than others. But I feel confident that none would be as bad as the garbled, crazy take written by Financial Service Centers of America executive director Edward D'Alessio in American Banker, which basically amounts to, "Nobody will fight terrorism if they can't make money off of payday loans."

Payday lenders, as you might have heard, exist for two purposes: to encircle the working poor in inescapable cycles of crushing debt, and to continually generate plausible-sounding reasons for why a civilized society should continue to allow their scumbag industry to exist.

In the service of the latter goal, D'Alessio has hit on something of an amoral masterstroke: He exploits recent tragic events and a nation's insecurity to pretend that the payday loan industry plays some sort of vital and irreducible role along the watchtower against organized terrorism. (Of course, in fairness, Bob Dylan did famously mention a "joker" and a "thief" on that watchtower, so perhaps this is to what he was referring.)

This, from the top of D'Alessio's op-ed, is just bonkers:

As the world ramps up efforts to detect and deter terrorist financing in the wake of tragedies in San Bernadino [sic] and Paris, one of our most effective mechanisms for fighting money-laundering and other financial crimes may well be endangered as a result of regulation being considered in the name of consumer protection.

The Consumer Financial Protection Bureau's proposal to regulate payday and other small lenders — which has yet to be formally released after being reviewed by a small-business advisory panel — could threaten thousands of companies that assist regulators in bringing laundering risks out into the light.

The Consumer Financial Protection Bureau is endeavoring to crack down on payday lenders, because the agency has this mandate to "protect consumers financially" from predators. You know, like payday lenders. It's just sort of the natural state of things. The CFPB guards against payday lenders the same way that your local animal control protects you from freaky, foaming-at-the-mouth raccoons.

Really, you should be glad that freaky, foaming-at-the-mouth raccoons do not have a powerful lobbying force in Congress or pull with trade press, otherwise there would probably be some op-ed from a rabid raccoon in Wildlife Control Magazine making some version of D'Alessio's argument, in which rabies is dressed up as a vital national security asset.

And D'Alessio's argument is hilariously disingenuous. According to his logic, if the CFPB successfully reins in the abuses of payday lenders, those lenders who double as "money services businesses" (MSBs) would go out of business. Since these MSBs often report suspicious transactions to the government, that would mean terrorist financing networks would have an easier go of things. All of which means some terrorist plot may not get uncovered, so we should by all means lay off the payday loan industry and let them operate without oversight or regulation.

"Without these institutions, certain transactions would be conducted without detection and law enforcement scrutiny," D'Alessio said.

As you might imagine, there's a piece missing. Payday lenders are not watching out for shady transactions or evidence of terrorist money-laundering out of some sense of patriotism. Rather, like all financial institutions, they're required to report suspicious or fraudulent transactions to the government. This they must do in good times and bad times, in sickness and in health, until the dissolution of their financial assets. Their legal duty to do so exists without regard to their profitability. The idea that the CFPB's attempts to protect the victims of payday lenders might in some way be responsible for a future act of terror, is the basest sort of fear-mongering.

Why, it's enough to make you wonder if the payday lending industry and its op-ed-writing flacks love their country. (An open question!)

Meanwhile, the people who are on the front lines against terrorism -- soldiers and veterans -- may have their own unique perspective on this battle between the CFPB and the payday lending industry. Specifically, the payday lending industry keeps trying to circumvent the Military Lending Act of 2007, and the CFPB keeps protecting the vets that are subject to its provisions, as they did in November of 2013:

The Consumer Financial Protection Bureau (CFPB) today took its first enforcement action against a payday lender by ordering Cash America International, Inc. to refund consumers for robo-signing court documents in debt collection lawsuits. The CFPB also found that Cash America – one of the largest short-term, small-dollar lenders in the country – violated the Military Lending Act by illegally overcharging servicemembers and their families. Cash America will pay up to $14 million in refunds to consumers and it will pay a $5 million fine for these violations and for destroying records in advance of the Bureau’s examination.

“This action brings justice to the Cash America customers who were affected by illegal robo-signing, and shows that we will vigilantly protect the consumer rights that servicemembers have earned,” said CFPB Director Richard Cordray. “We are also sending a clear message today to all companies under our watch that impeding a CFPB exam by destroying documents, withholding records, and instructing employees to mislead examiners is unacceptable.”

So there you have it. The representative of an industry that profits in part by conning veterans out of their money is suggesting that if the CFPB protects consumers too well, it will leave the industry too cash-poor to continue to monitor transactions for suspicious activity. It's a bad op-ed, written by a bad person, in support of a bad idea.

That said, I always sort of suspected that the first group of people to declare themselves in open opposition to an "America first" attitude toward vigilance against terrorism would be the payday lenders, so in a way this is almost comforting.


Jason Linkins edits "Eat The Press" for The Huffington Post and co-hosts the HuffPost politics podcast, "So, That Happened." Subscribe here. Listen to the latest episode below.