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New Study Shows How Overregulating Short-Term Lenders Harms Consumers

We at CFIF have consistently highlighted the peril of federal, state and local government efforts targeting the short-term consumer lending sector.

Less than two years ago, we specifically sounded the alarm on a New Mexico law artificially restricting interest rates on short-term consumer loans.

Well, a new study entitled "A New Mexico Consumer Survey:  Understanding the Impact of the 2023 Rate Cap on Consumers" that surveyed actual borrowers confirms our earlier warnings:

Key findings include:

•Short-term,small-dollar loans help borrowers manage their financial situations, irrespective of the borrower’s income.

•The rate cap has failed to improve the financial wellbeing of New Mexicans, specifically those who had previously relied on short-term, small-dollar loans.

•…[more]

November 27, 2023 • 03:57 PM

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Tea For Two: Richard Lugar, Orrin Hatch and the Tea Party’s Role in the 2012 Elections Print
By Troy Senik
Wednesday, February 16 2011
While the 2010 election may have been about shaping a new generation of Republican leaders, 2012 looks like it will be just as much a referendum on the existing ones.

Democracy, whatever its defects, has this to recommend it: Like the market economy, it is a mechanism for transmitting information. When the demand for rutabagas declines on the free market, so does the price, because sellers are intent on clearing their existing inventories. If the trend continues over the long run, many sellers of rutabagas may leave the market entirely.

In the political realm, a similar phenomenon currently seems to be taking place in the Republican Party. But in place of rutabagas, the item of declining value is establishment Republicans – those who generally hew to GOP positions but can jettison conservative principles with little regret when it serves the interests of political expedience.

Because of the infrequency of elections, this information is taking longer to reach the political market than it would in the hypersensitive economic market (one need only look at Wall Street’s daily fluctuations to see the fluidity of marketplace churn). Indeed, many establishment types only learned of their decreasing purchase upon seeing their counterparts unexpectedly extinguished in 2010’s Republican primaries.

Among the list of victims in U.S. Senate races were Utah’s Robert Bennett, Nevada’s Sue Lowden, Kentucky’s Trey Grayson, Florida’s Charlie Crist and Delaware’s Mike Castle.  Close inspection of this roll call reveals an interesting trend: Only Bennett was an incumbent (to be fair, incumbent Pennsylvania Senator Arlen Specter would almost certainly have befallen a similar fate had he not decamped to the Democratic Party in an unsuccessful attempt to save his seat).

Yet while the 2010 election may have been about shaping a new generation of Republican leaders, 2012 looks like it will be just as much a referendum on the existing ones.

Of the eight Republican senators currently believed to be preparing for reelection, only two – Mississippi’s Roger Wicker and Wyoming’s John Barrasso – look to be immune to potential primary challenges. No such luck for Maine’s Olympia Snowe, Massachusetts’ Scott Brown, Nevada’s John Ensign, and Tennessee’s Bob Corker. The two other senators facing potential challengers – Utah’s Orrin Hatch and Indiana’s Richard Lugar – are perhaps the most instructive examples, however. For in their two campaigns, we will likely see antithetical responses to the growing influence of the Tea Party.

In his nearly 35-year career in the Senate, Hatch has made no bones about being a company man. For most of his career, however, his relatively conservative voting record has been sufficient to insulate him from Republican activists’ distaste for his accommodationist streak. But the Beehive State’s senior senator has increasingly angered conservative activists in recent years. He supported the TARP bailout in 2008 as necessary to stave off another Great Depression; he was quick to accommodate Alaska Senator Lisa Murkowski when she chose to mount an independent bid for reelection instead of accepting her defeat in the Last Frontier’s GOP primary, and he earned lower rankings from the fiscally conservative Club for Growth in recent years than his deposed counterpart Bennett.

With the memory of Bennett’s surprise defeat still fresh in his mind, the 76-year old Hatch is now attempting to reinvent himself as the Tea Party’s best friend. Last week, he made a pilgrimage to the Conservative Political Action Conference to disavow his vote in favor of TARP. He’s made a point of publicly cheering every blow to ObamaCare despite once sponsoring a health care bill that featured the individual mandate. And he’s gone out of his way to distance himself from Bennett, describing himself as “actually much more conservative, by quite a measure.” For Hatch, the road to reelection runs through a courtship of the Tea Party.

Indiana’s Richard Lugar, on the other hand, will brook no such accommodation. Lugar – who will be 80 when he pursues his seventh term in 2012 – is the kind of lionized centrist who seems to exist for no greater purpose than giving David Broder someone to celebrate in print. During more than three decades in the upper chamber, he has consistently split the difference between conservative and liberal principles on foreign policy (his primary legislative bailiwick), supported amnesty in the form of the McCain-Kennedy immigration reform bill and the DREAM Act and offered support to liberal Supreme Court justices out of a misbegotten sense of deference.

Because of this record, Lugar has become a natural target for Tea Party rage. But unlike Hatch, his response has been utter dismissal. When pressed for a reaction to Tea Party opposition to the START arms control treaty with Russia, Lugar’s thoughtful response was, “get real!”  Despite the strong Second Amendment culture of the tea parties, Lugar recently called for the reinstatement of the assault weapons ban that expired in 2004. And when Lugar met with a group of Indiana Tea Party activists in December, they left unconvinced that he was willing to do anything to advance their views.

Come 2012, Hatch and Lugar will put the tea partiers’ mettle to the test. Can the latter survive in an act of sheer defiance? Can the former retain his seat through a political deathbed conversion? The immediate answers will decide the fate of two senate seats. But the deeper explanation may shape the face of the Republican Party in the Senate for years to come.

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