Want to do yourself and your family a favor this holiday season? Steer clear of car-title loans and related high-interest loan schemes. Need a good New Year's Resolution? Resolve to contact your state legislators and urge them to approve reforms to protect all Iowans from these high-interest loansharking schemes.



That's strong language, but it accurately describes these storefront operations that lend money at more than 300 percent interest. I'm talking about financial parasites that prey on individuals and families in financial distress. Iowa Attorney General Tom Miller recently talked publicly about an Iowa veteran who had taken out one of these "car title" loans. This man had lost his apartment and was using the car as his home. He was at a veterans hospital when he fell behind on his payments and his car was repossessed, right before the Thanksgiving holidays.



Because of lax state regulations and enforcement, Iowans are being targeted for exploitation by an ever-growing array of predatory-lending operations. Their victims share a fundamental misconception that many citizens of our state also believe: "If it is legal, it must be reasonable."



Our laws should regulate consumer transactions to make sure that they are reasonable. That's an assumption many of us safely rely on when it comes to such consumer financial services as bank accounts, credit cards, home sales, and car purchases. You might not always read the fine print because you assume that the terms are within reason.



But that "legal means reasonable" assumption isn't the case at all when it comes to short-term loans secured by the title to your car or by a personal check. There is a loophole in Iowa law that is allowing unscrupulous operators to prey upon Iowans in trouble. What is loansharking if not a 360-percent-interest loan that puts the title to your car at risk?



Last year in the Iowa Senate, I helped pass a bipartisan effort to limit the maximum finance charge allowed for consumer loans secured by a car title to no more than 21 percent per year.



This reform unanimously passed the Iowa Senate, twice. Unfortunately, the leaders of the Iowa House refused to allow the bill to be debated. We are going to try again this session. I ask that you thank your state senator for voting for the car-title-loan reform legislation and encourage your state representative to fight for a vote on the same measure. If you have any questions, please contact me at (roger.stewart@legis.state.ia.us).



State Senator Roger Stewart



Preston, Iowa






Muscatine Owes Iowa an Explanation




The announcement by Muscatine Power & Water (MP&W) that it projects a $1.7-million loss for its municipal broadband and cable-TV operation in 2006 and will need to raise rates is unfortunate, but comes as no surprise to those who have followed the municipal broadband scene.



This September, the Heartland Institute issued a research report by Dr. Ronald Rizzuto, professor of finance at the University of Denver, that analyzed the financial performance of MP&W's broadband operation since its inception and concluded that it would continue to lose money and that MP&W would have to raise rates. (The report can be found at (http://www.heartland.org/article.cfm?artId).



MP&W was among those who attacked the report as anti-muni disinformation. In an October 1, 2005, op-ed in the Muscatine Journal, Jay Logel, MP&W general manager, decried the report as misinformation and called Rizzuto's prediction of a rate increase misleading and grossly inaccurate.



These comments came as other communities in Iowa were preparing to vote on whether to pursue municipal broadband initiatives of their own. Financial performance of these systems, and the true cost they impose on the community, was being hotly debated. By stating that its investment in a municipal system was was and continues to be the right decision for Muscatine, Logel and MS&W were urging other Iowa cities and towns to follow their example in sanctioning municipal-owned systems.



Now, just a few months after the election, MP&W has shown that Rizzuto's report, far from being misleading and inaccurate, was dead-on. MP&W is indeed still losing money and will have to raise rates. It owes an explanation for this sudden reversal of fortune not just to the ratepayers in Muscatine, but to all those in Iowa who voted in favor of municipal broadband based on MP&W's earlier statements about its own financial health.



Steven Titch



Senior Fellow, IT and Telecom Policy



Heartland Institute



Chicago, Illinois






Correction




In last week's cover article on East Moline, a statement by Painted Monkey Tattoo owner Sam McFarland was taken out of context. McFarland did not say that she found typical tattoo parlors "creepy"; she said that some older female customers are uncomfortable in tattoo parlors. The Reader apologizes for the error.

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