DOJ is essentially employing a variant of the tactics former New York Attorney General Eliot Spitzer used against mutual fund companies last decade: threatening to smear them in the business community and otherwise make their lives miserable unless they settle.
Even despite the tactics, some readers may be reacting to all of this as a good idea. After all, payday lenders don’t have the cleanest of hands, and some — but far from all — may be operating illegally. There are two problems with this position.
The first is that DOJ doesn’t have the constitutional authority to go after businesses whose illegality has not been established by threatening their bank and financial services providers with legal sanctions and regulatory harassment if they don’t participate in the persecution. There are these things called laws which must be passed to declare certain financial practices and contracts illegal. That hasn’t happened. Short of that, there at least need to be court rulings having the same effect. There is apparently no evidence that DOJ has involved the courts at all.
The second is that although the bankers’ montage concentrated on payday lenders, many more business endeavors besides payday lending are involved. At least some of them, as odious as nanny-state officials and other might believe they are, operate legally.
This doesn’t happen in a free country.