If you need cash in a hurry, you can easily find lenders - online, or at offices in many Southern and Western states - who are happy to give you $500 today, and collect it back, with hundreds of dollars in interest, from your next several paychecks.
That kind of payday lending is illegal in Pennsylvania and more than a dozen other states. Pennsylvania law effectively limits interest on loans under $25,000 to 24 percent a year.
But that hasn't stopped a group of canny investors and their lawyers from finding ways to make high-interest loans that they say don't violate state laws.
In the 1990s, payday lenders cut deals with small banks such as the former Crusader Bank of Philadelphia to make high-rate loans under their regulatory charters. When state officials challenged that practice, County Bank of Rehoboth Beach, Del., and other lenders in states with sky-high loan limits lent their names to payday lenders.
When national bank regulators blew the whistle, payday lenders cut deals with Indian tribes, which enjoy broad immunity from state and local laws, to export permissive tribal consumer practices to fund quick loans.
The lenders figured they were only doing what the nation's dominant credit card banks did when confronted by old state usury laws in the past: using the Constitution's protections against restraints of trade to export high-rate lending across state lines.
So the recent crackdown on payday lenders by Philadelphia U.S. Attorney Zane David Memeger's staff has surprised some of the mainstream financial people who have been running payday lending businesses for years.
Last June, Memeger's prosecutors hit Adrian Rubin of Jenkintown with racketeering conspiracy charges for "deceptive business practices," including getting a bank, a tribe, and his own relatives to pretend they owned his "multimillion dollar" lending operations. Rubin is contesting the charges; the case is set for trial in May.
In January, the Pennsylvania Attorney General's Office won a federal court decision allowing their civil case alleging illegal lending to proceed against Think Finance, a venture capital-financed, Silicon Valley-backed dot.com payday lender.
On April 7, as my colleague Jeremy Roebuck reported, Memeger charged Main Line businessman and Wharton School graduate Charles M. Hallinan with racketeering fraud, conspiracy and money laundering.
Memeger also brought charges against Wheeler K. Neff, a prominent attorney in Delaware, whose bank-friendly laws have made it the nation's consumer-lending capital, home to credit card units for Chase, Bank of America, Capital One, and other giant lenders.
In the late 1970s, Neff served as a Delaware deputy attorney general. In the 1990s he was general counsel for Beneficial Corp., a Wilmington-based company that had for 70 years collected vast profits, as I wrote in 1995, "lending money to poor people at high rates of interest," often 10 to 20 points above bank rates.
Beneficial was sold to the former Household Financial Corp. in 1997 for $8.6 billion. Neff embarked on a new career, helping Hallinan and other payday-lending entrepreneurs find legal ways to make loans at much higher rates than Beneficial charged.
In 2008, New York state, under then-Attorney General Eliot Spitzer, sued Hallinan's and Rubin's firms and their bank partner for allegedly violating loan laws. The case was settled for $5.5 million without a finding of wrongdoing.
Neff and his Philadelphia lawyer, Christopher D. Warren, said they were "very surprised" by Memeger's racketeering charges eight years later.
Warren noted Neff's status as "an experienced corporate and banking attorney" who has shown "a spotless record with the Delaware Bar during his 40 years as a lawyer."
Warren also cited a precedent well-known in Delaware banking circles: "The attack on Tribal lending is reminiscent of the class action and government attacks on the legal exportation [to states with restrictive laws] of rate pre-emptions of credit card lenders and refund anticipation loan issuers of 20 to 30 years ago that were resolved in favor of the lenders," Warren wrote in a public statement.
The loans Neff helped make "are enormously popular," he noted. (A few Pennsylvania legislators, including State Rep. Chris Ross (R., Kennett Square), have been trying to legalize payday-lending loans here for years.)
Warren adds that it's "settled law" that tribes "are immune from state lending and licensing requirements" and said his client will win in court.
But prosecutors argue that Pennsylvania courts, in a series of decisions culminating in a Supreme Court decision in 2010, have set clear limits on unwelcome interest-rate imports from high-rate jurisdictions.
Neff's lawyer traced the case against him to the "sudden" designation of payday lending as "politically incorrect in some government circles."
It's as if they live in separate countries:
High-rate lenders and their advocates are asking, "Why is this suddenly illegal?"
And consumer advocates are wondering, "What took them so long?"