Governor Pete P. Tenorio ought to be commended for rejecting the bill to regulate consumer finance companies like Norwest and Pacific Financial. There is simply no need for such legislation.
While it is certainly true that these companies charge high interest rates (as much as 24 percent in some cases), they have every moral right to the profits they make. We are dealing here with the freedom of private enterprise, with free enterprise, not tyrannical communism or socialism.
The government simply has no right to dictate prices or profit margins. It is not for Timmo Olopai, or Dino Jones, or Rosiky Camacho, to tell Duty Free what to charge for its Rolex watches. Prices must be determined by consumer demand, commercial competition, employee productivity–in short, by whatever the market will bear.
I personally would not apply for a loan at any of these consumer finance companies, not at those exorbitant rates, and not when my good credit history allows me to secure bank loans at half the interest rate one would normally pay at Norwest, for example.
But for whatever reason, some of us do not have access to bank loans. Some of us are desperate enough to obtain a loan at 24 percent. This is where consumer finance companies become useful. This is where they fill a market need for higher risk loans, for which they quite understandably charge a higher premium.
The consumer is not forced or defrauded. He understands the terms of the loan, and voluntary accepts them, risking his collateral should he fail to pay for what he owes. The government has no business intervening where there is no fraud or force–where no rights have been violated. It is up to the private individual to be responsible for his own personal finances (and to face the consequences if he fails).
This “loan shark” label is absurd. If the consumer fails to pay, Norwest doesn’t compel Dino Manning or James Matsumoto to go out and break legs. Instead, assets are secured in default of the loan.
What does the government expect the company to do? Suffer the loss? Offer a free handout?
Norwest is not the CNMI government; it can’t coerce or collect taxes to support itself. It must charge for its loan services; and if customers don’t pay for their services, they go out of business. It is just that simple.
Some cynics will suggest that Teno only vetoed the bill because his son is in the consumer finance business. Others will say that it was rejected because of Peppero’s connection to Joeten, which also has a consumer finance division. Whatever the reason, it was a good decision.
Congratulations to the governor. Continue to leave Norwest alone. It is a good company, and a solid stock (Wells Fargo) in my retirement portfolio.