Consumer Heroes and Zeroes
Who deserves praise? Who has hurt consumers?

Rent to Own Heroes

Rent to Own Zeroes
0: Peter Verniero

Second Mortgage Heroes

Second Mortgage Zeroes

Top of this page

CLNJ Home Page

Bankruptcy Heroes and Zeroes

N.J. HEROES: who opposed the awful Bankruptcy "Reform" Act were Congressmen Donald Payne, Frank Pallone Jr., Bill Pascrell and Rush Holt, and Senators Jon Corzine and Frank Lautenberg.
ZERO, six figures: N.J. Former Senator Robert Torricelli sponsored the anti-consumer bankruptcy bill. It's time to listen to average people, Senator, not just bankers wanting to donate money! MBNA credit card bank gave the Senator $150,000 for the Democratic senatorial campaign. Campaign finance reform ought to mean an end to favored treatment for these fat cats. It is illegal to pay money to a Judge deciding your case-- the same standard ought apply to members of Congress!

Zero George W. Bush took $250,000 of MBNA's money. He is against bankruptcy for the middle class, but he supports the Texas and Florida laws which let millionaires shield $10 million mansions from creditors in bankruptcy. If anything in bankruptcy needs reform, it's loopholse for the millionaires! One of his supporters specializes in high interest loans to the poor.

Kudos to former Senator Howard Metzenbaum (OH) for the 1994 bankruptcy amendments letting N.J. homeowners save their homes through Bankruptcy payment plans.

Rent to Own Heroes
U.S. Representative Mike Ferguson gets a hero badge for voting against HR 1701, on November 28, 2001. This bill would legalize unlimited interest (yes even 300%) plus prohibit government from mandating disclosure of the Annual Percentage rate, so the consumer victims won't know how badly they have been taken.

Consumer heroes at the Fall 1998 Assembly Hearing on rent to own were Assemblywomen Nia Gill and Loretta Weinberg, who argued and voted against the anti-consumer A.1097. Ms. Weinberg deftly refuted the claim that the rent to own industry is mainly "renting" goods short term. She pointed out that what A.1097 does is to legalize the "OWN" in rent to own: the entire point of the bill is to permit sales at usurious rates. Asm. Anthony Impreveduto got a RTO operator to admit that he sold $400 washers for $900. [This is interest at 125% annual percentage rate!] So Asm. Impreveduto said: "Then it's true!" and he asked "Isn't 30% interest enough for anyone?"

Other heroes are Asm Bagger and Senator Diane Allen, for sponsoring the pro-consumer bill, and Asm Geist and AssemblymanWilfredo Caraballo for their vigorous condemnation the the rent to own industry in the January 1998 Assembly vote. However, we must repossess Asm Caraballo's hero award because in 2005 he sponsored the pro-industry bill A. 3851 which would exempt rent to own from New Jersey's 30% criminal usury law.

Media heroes are the Asbury Park Press, the Record, and all the other newspapers which denounced rent to own bills in editorials. The Asbury Park Press has also been honored for its 1997 series of articles "House of Cards," which detailed how loose lending standards brought ruin to many unsuspecting homeowners, and brought doen lender Walsh Securities Inc.

New Jersey Public Interest Research Group Citizen Lobby, Jerry Flanagan, Benita Jain get great praise for lobbying until literally the final hour of the last Assembly session (Jan. 1998) when the industry's RTO bill fell short. This year rent to own is back again with the same bad bill.

Rent to Own Zeroes

The Assembly zeroes voting for A.1097 in Fall 1998 were chairman Jeffrey Moran, and Asm. James Holzapfel, Asm. Michael Arnone, Asm. Joseph Azzolina, and Asw. Barbara Wright. In the Senate, Senators Cardinale, Singer and Lesniak voted with the industry. In 1987-98, Speaker Jack Collins and Senator Donald DiFrancesco helped the RTO industry by posting the RTO special interest bills for floor votes.

Special shame belongs to former Attorney General Peter Verniero, who blocked in 1998 and 1999, any testimony by the NJ Division of Consumer Affairs which would have opposed the rent to own bill. Lawyers from the Attorney General's office actually participated in the three lawsuits, whose unanimous result was that RTO violated the laws of New Jersey. The N.J. Division of Consumer Affairs, Director Mark Herr, has sided with the consumer against rent to own bills, but in the last year, any pro-consumer voice has been silenced by Attorney General Verniero. No one from New Jersey state government testified against rent to own in the fall and winter of 1998-99, when RTO came within four votes of legalizing loanshark rates! This Attorney General has appeared in the Legislature to denounce the petty theft of ticket scalpers, but he appears blind to the widespread violation of the criminal usury law which was revealed in the suit Green v. Continental Rentals (1994). Rent to own is directed against the poor and urban residents. Folks with a car and a credit card go to Sears at the mall. Consumers League thinks the Attorney General should protect the poor, and we would love to have state government on the side of consumers. Representative of the Kean and Florio administrations testified against rent to own special interest bills, which is why New Jersey has not legalized this loansharking scam.

The Division of Consumer Affairs could also promulgate a Regulation to end the abuses which three jurists found violated N.J.'s Consumer Fraud Act.

An ironic hats off to our adversary Dale Florio, the lobbyist for the rent to own special interests. Mr. Florio was Governor Whitman's fundraiser. Mr. Florio has been very industrious in selling the Legislature on legalizing loanshark interest rates, as a convenience to the urban poor. Apparently many members of the Legislature wish to do him favors. Mr. Florio's argument is that, if not for rent to own, the poor would get no televisions. CLNJ replies, that when New Jersey starts enforcing the current 30% criminal usury law (NJSA 21:12-19), then the urban poor will get $250 televisions for $300 on credit, (instead of $1,000) because they will get them at legitimate merchants, not at rent to own.

Second Mortgage Heroes
Journalist hero Jonathan Kwitney died young, in 1998, but CLNJ has a long memory, and honors his work. Working for a small NJ newspaper, Mr. Kwitney wrote a classic expose circa 1965 about abuses in second mortgage lending by finance companies. People lost their homes for $3,000 mortgages then, with heavy "points" and unfair credit practices. A Real Estate Commission was convened to investigate, and the N.J. Legislature passed the "Secondary Mortgage Loan Act," which was certainly the strongest such law in the country. The Act prohibited points and other charges, and the penalty was that the mortgage would be "void" if the law was broken. In those days, the Legislature actually passed pro-consumer laws!

Twenty years later, the industry lobbied the Legislature to weaken this fine law. Consumer heroes in defending the law were John Thurber of the former N.J. Public Advocate's Office, and NJPIRG and its former chief lobbyist Rob Stuart.

Second Mortgage Zeroes
Senator Raymond Lesniak and Asm Louis Kosko led the charge to weaken the law at the behest of Beneficial Finance Co. and the Money Store. Banking Commissioner Mary Little Parrell supported the industry bill to weaken the law. After five years of lobbying, the industry got the good law weakened.

In 1988, only a few months after New Jersey passed a list of anti-consumer measures, the US Congress enacted a Home Equity Consumer Protection Act which included an idea from CLNJ testimony before the US Senate: Congress prohibited "rate rise surprise" which would have let mortgage lenders change the method of interest rate calculation AFTER you signed the contract! Congress prohibited one of the abuses N.J. would have permitted.

Join CLNJ | Contact CLNJ | Newsletters |
Credit Cards | Rent to Own | Current Issues | Suits |
NJ Legislature | Congress | Heroes & Zeroes-Top of Page |
Consumer Links | History of Consumers League | Civics Lesson

Copyright 1999-2005 by Consumers League of New Jersey, All rights reserved.