According to Legislative Auditor Daryl Purpera, borrowing maneuvers under former Gov. Bobby Jindal in his attempts to get quick cash for the state budget have had unforeseen long-term effects and have increased state debt by as much as $231 million, pushing the state closer to its debt limit.
The report says Louisiana got extra money upfront by agreeing to pay higher interest rates over the life of the debt, which will ultimately cost the state an additional $71 million. The report also disclosed that the Jindal administration used $335 million in surplus dollars that could have been used either to pay off debt or for construction projects, which would have saved $160 million in interest payments on long-term debt.
But perhaps the most alarming practice to come to light is that Jindal began using payday loans to fund the state payroll. When questioned about the prudence of the decision, Jindal replied, “Well, isn’t that what they’re for? Why else would they call them ‘payday loans’?”
Auditors also have learned that Jindal borrowed from CashNetU$A, whose motto is “Have No Fear, CashNetU$A Is Here.” According to its website, its loans are “Easy, Convenient and Fast.”
The annual percentage rate charged on some of the loans offered by CashNetU$A’s “Easy, Convenient and Fast” loans is 912.5%, and I am not making that up. After all, they are “Easy, Convenient and Fast.” These are the kind of loans that would make Vito Corleone blush, but then CashNetU$A never has been known to break the legs of a delinquent borrower. That’s because it operates perfectly within the law.
Unfortunately, Jindal soon learned that CashNetU$A loans had to be repaid within 30 days. Once again, fortune smiled on our man Bobby. While watching reruns of The Brady Bunch, he saw an ad for Western Sky Financial: “The Problem Solver Loan — Get up to $10,000 in a day!”
Another strategy considered by Jindal was to send money to Joel Osteen or one of the other televangelists who promise God wants you to prosper.
Jindal, in order to deal with the state’s financial woes, held a prayer rally where he proclaimed “Our God wins,” which indicates he interpreted the ad for Western Sky Financial to be an answer to his prayers, if not a message from the Almighty Himself.
The APR for a typical WSF loan of $10,000 is 89.68%, with 84 monthly payments of $743.49, resulting in the debtor repaying $62,459.16 over the life of the loan. Any prudent financial manager would readily see that 89.68% is much better than the 912.5% charged by CashNetU$A, so naturally, Jindal signed on the dotted line.
Jindal also considered lenders located in Baton Rouge, like Speedy Cash, with APRs as high as 697.41%. Again, I am not making that up. However, forgetting that he was more recognizable in Iowa than in Baton Rouge, he was concerned someone might recognize him when he went in to pick up the cash.
Another strategy considered by Jindal was to send money to Joel Osteen or one of the other televangelists who promise God wants you to prosper. Evidently, there are a considerable number of people who have adopted that investment strategy, as Osteen lives in a $10 million mansion, travels in his own private jet, and has great teeth.
Grover Norquist once said, “I’m not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub,” and it appears that his disciple Bobby may have come pretty close to accomplishing that for Louisiana.
To date, Gov. John Bel Edwards has not called upon Jindal to help with the transition.