Despite the populist rhetoric and anti-bank bank posture, a look behind the curtain of the Wall Street Reform bill reveals nothing more than self-interest, business as usual and more power and influence to Wall Street instead of the free market.  And as if the permanent bailouts and too big to fail advantages already in the Obama Dodd bill aren’t enough for the greedy banks, a proposed amendment offered by former Bank of America executive Sen. Kay Hagen is a perfect case and point.

Hagen’s amendment proposes to “protect consumers” from lenders whose market includes lower and middle class Americans — the type of folk that Bank of America wouldn’t lend a dollar to — despite trillions in federal support.

These loans, often called “payday loans,” provide short-term cash to Americans who need money to repair their car, fix their house, even pay a medical bill, while they wait for payday to payback the loan.  The Hagen amendment would limit competition for the big boys at Bank of America but allow consumers to take cash advances from their credit cards.

The Hagan amendment does not protect consumers from outrageous and exorbitant fees that Bank of America charges consumers.  In fact, its actually going to cost consumers more in fees. A Bank of America customer with a two-week overdraft of $66 results in a $30 fee — an APR of 1,165%!  In fact, last year Wall Street banks charged consumers $38 billion in overdraft and NFS fees. And by putting the traditional short term lenders out of business, the Hagan amendment will force more strapped consumers to resort to paying overdraft fees that will earn big banks an additional $14 billion a year.

Its not surprising to find out that Sen. Hagan has received over $315,000 in political contributions from commercial banks and financial institutions including $19,000 from Bank of America.

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The Virginia State Credit Union is mining for gold and it’s finding it.  Thanks to former Virginia Governor Tim Kaine, state employees are being duped into a credit product designed to take more money from their paychecks than the payday loans it was designed to replace.  Not only that, this spider catches its flies via unfair competition.

Welcome to The c, or “Virginia PDL Public Option”.  It’s as bad an idea as has ever come into the credit space, short of the credit default swap.  Naturally, it is the invention of Government.

I’ll jump over all the usual falsehoods that Mr. Kaine presents and cut to the chase.

What’s so bad about this program?  Let’s take the unfair competition part first.   I don’t have any problem with the government entering the consumer credit business, just as I have no problem with a fair public option for health care, as long as the playing field is level. Therein lies the rub.

The PDL Public Option provides loans up to $500, at a 24.99% APR, with a six-month term, and a limit of  2 loans annually.  It requires membership in the Virginia Credit Union (VACU), which administers the program.   The VACU also requires direct deposit of the borrower’s paycheck.

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