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Wednesday, 5 August 2009

Spot the difference

Here is a report from the BBC today:

August 5 (BBC) -- A loan shark who made almost £3m by charging clients up to 2,437% interest has been jailed for five years. John Kiely, 36, of Chapel-en-le-Frith, Derbyshire, was convicted of blackmail and illegal money lending at Manchester Minshull Street Crown Court. He was also found guilty of one count of acquiring criminal property, two counts of concealing, disguising, converting or transferring criminal property, and two counts of unlawfully failing to give notice of a change in circumstances. At an earlier hearing Kiely also admitted five counts of illegal money lending.

Consumer minister Kevin Brennan said: "Thugs like Kiely who prey on vulnerable people cause untold misery within communities."

And here is another from Bloomberg last month:

July 22 (Bloomberg) -- Pacific Investment Management Co., Centerbridge Partners LP and the four other bondholders that put up $2 billion in financing for CIT Group Inc. made an instant $100 million on an investment analysts say is almost risk free.

CIT, the 101-year-old commercial lender struggling to retire $1 billion of debt maturing next month, agreed to pay a 5 percent fee to the creditors and annual interest of at least 13 percent. On top of that, the New York-based company pledged assets worth more than five times the amount of the loan as collateral.

If CIT wants to retire the loan early, it must pay a 2 percent exit fee in addition to a prepayment premium of 6.5 percent on the amount it wants to reduce, the filing said. The 6.5 percent will decline to zero over 18 months.

Interest will be set at 10 percentage points more than the London interbank offered rate, which will have a floor of 3 percent. Three-month Libor was set at 0.502 percent today.

If that isn't preying on vulnerable borrowers, I don't know what is.

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