Wall Street and Legalized Loan Sharks

08/03/2010 09:54 pm ET | Updated May 25, 2011
  • Don McNay Best selling lottery and structured settlement expert

In my childhood, Northern Kentucky was a hot spot for organized crime. In a town full of hustlers, prostitutes and gamblers, the profession they looked down on was loan sharking.

It wasn't unusual for a loan shark to wind up floating in the Ohio River. One of the biggest names in the business, Frank "Screw" Andrews, (who is a central character in Hank Messick's book, Syndicate Wife) "accidentally fell" out of a 4th floor window.

If Screw was in business today, he would be a captain of industry. Loan sharking is now legalized. Today, we call the loan sharks "payday lenders."

The stock of payday lenders is traded on the New York Stock Exchange and NASDAQ. Many payday lending companies do business with Wall Street's biggest banks.

As Gary Rivlin notes in his book, Broke USA, "[T]he working poor have become big business."

You wouldn't think that poor people would be a growth market, but businesses make big money off people who live paycheck to paycheck.

Frank "Screw" Andrews met his fate out of a hospital window in 1973. I'm sure he never dreamed that nearly 40 years later, his business would be operating legally in almost every city in the country.

Screw knew how to bribe local officials with cash payments. He didn't live to the see such bribery legalized in the form of lobbying and political fundraising.

Broke USA makes it clear that the public and those in the media don't care for payday lenders much.

It also makes it clear how many friends the Poverty Industry has made by paying big dollars to lobbyists and giving huge contributions to lawmakers.

They are also funded by Wall Street.

Until I read Broke USA, I didn't realize what a big hand the "too big to fail" banks have in creating the Poverty Industry.

Citigroup, JP Morgan Chase and Bank of America are just some of the big banks that make huge profits, directly or indirectly, from the Poverty Industry.

They have another common bond. They received bailout money from the American taxpayers in 2008.

They are directly or indirectly in the Poverty Industry. Since we bailed them out, that makes us directly or indirectly in the Poverty Industry, too.

If there was ever a shining example of why you should Move Your Money from Wall Street, legalized loan sharking is a good one.

The people peddling poverty products have figured out the there is a strain of Americans who are the financial equivalent of drug addicts. They will pay any price, fee, or interest rate as long as they can get an immediate fix. They don't care about tomorrow. They just want money today.

Just like a heroin addict, a financial junkie will usually die before the addiction runs out.

If Broke USA did anything, it convinced me why a separate consumer protection agency was needed and why someone like Elizabeth Warren needs to be leading it.

Don McNay, CLU, ChFC, MSFS, CSSC is an award-winning financial columnist and Huffington Post Contributor. He lives in Richmond, Kentucky.

You can read more about Don at

McNay founded McNay Settlement Group, a structured settlement and financial consulting firm, in 1983, and Kentucky Guardianship Administrators LLC in 2000. You can read more about both at

McNay has Master's Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University.

McNay has written two books. Most recent is
Son of a Son of a Gambler: Winners, Losers and What to Do When You Win The Lottery.

McNay is a lifetime member of the Million Dollar Round Table and has four professional designations in the financial services field.

Nick McNay produced the video for this post.