Daryl Lease is an editorial writer at the Herald-Tribune in Sarasota, Fla. His e-mail address is daryl.lease@herald-trib.com.

Florida boasts many unusual roadside attractions, including the world's biggest beach ball (Pensacola) and ball of barbed wire (St. Augustine). Few of these visions are as outlandish or surreal, however, as the big-bellied sharks that sit behind plate-glass windows in strip shopping centers, leisurely waiting for their prey to peek in the front door.

To visit such an establishment, just look for signs that bear the word "cash" and some variation of the adjectives "quick,"fast" or "EZ." Walk in with the spare key and title to your vehicle, drop them on the counter as collateral, and you can emerge minutes later with a fistful of loan money -- at annual interest rates of up to 264%.

The transaction will not be explained quite that way, of course. The rate is usually touted a less-fearsome sounding 22% a month. Also murky are the terms of repossession. Borrowers in Florida and other states have discovered, to their dismay, that the lenders have the right to keep all of the proceeds from selling repossessed vehicles -- even if the take is hundreds or even thousands of dollars more than the loan amount.

Most rational people would flee, goggle-eyed and screaming, from predators this vicious. But the sharks that run the title-loan shops and similar businesses tend to feast on struggling, inexperienced swimmers, many of whom are in financial waters way over their heads.

Legalized loan sharking

Title loan shops are getting rich with dubious practices

Florida offers a climate especially hospitable to loan sharks. It now has more than 600 title-loan businesses, a number that jumped after the Legislature -- prodded by two former House speakers-turned-lobbyists -- gave the industry a special exemption to the state's interest-rate cap. (Lawmakers have passed a bill to return to the original 30% cap, and it awaits action by Republican Gov. Jeb Bush.)

The Sunshine State certainly is not alone in harboring predatory lenders, however. They are thriving all over the United States, thanks in part to lifeguards in state legislatures who find it profitable to look the other way.

Despite a strong economy, title-loan shops, payday-advance stores and other high-rate lenders are doing brisk business nationwide. The "sub-prime" industry -- whose customers generally have lower incomes than the "prime," good-credit borrowers -- boasts assets of more than $400 billion, according to Business Week. The total is expected to surpass $1 trillion this decade. Already, assets for the industry are twice the amount for the nation's largest retail banker, Bank of America.

Among the most lucrative are payday-advance shops, which now number more than 9,000 nationwide, up from just 300 eight years ago. Typically, customers write postdated checks to these shops, then return after payday to buy back the check or roll over the loan for another seven days or more. For each loan, the shops charge a fee of 15% or more above the principal; nationally, the average charge on a two-week payday loan is a staggering 474% on an annualized basis.

At Ventureseek.com, a Web site that aims to link venture capitalists with budding entrepreneurs, a Charleston, S.C., business consultant recently posted a rather forthright account of what payday lenders do: "Now, please get your calculators and 'work the figures.' Those 15% service fees equal a 372% APR when applied to advances out for 14 days and a whopping 756% APR on advances turned over in 7 days. Now you know why this retail service niche, virtually unknown six years ago, has exploded across America."

Indeed, it is easy money for folks who are not especially burdened by a conscience. According to Business Week, easy-money lenders earn an annual 23.8% return on their investment, compared with a 13% to 18% return on traditional loans.

Preying on the poor

Loan sharks also are patrolling the waters of the mortgage industry. Federal Reserve Board Chairman Alan Greenspan recently urged a crackdown on lenders that target poor and minority neighborhoods with high-interest refinance packages and home-equity loans.

In North Carolina, these lenders are approaching owners of Habitat for Humanity homes and suckering them into trading 0% loans for home-equity loans and other packages with above-market interest rates. The Coalition for Responsible Lending, a consumer advocacy group, says 10% of Habitat homes in North Carolina were refinanced at exorbitant rates between 1987 and 1993. The group says the problem continues today.

Sub-prime loans "involve some of the worst frauds I've ever seen in the consumer market," Federal Trade Commission Chairman Robert Pitofsky recently told Business Week. "You have very vulnerable populations preyed upon by lenders whose goal is to foreclose."

Indeed, even people who are not in dire straits are being taken for a ride. Dollars and Sense magazine says that studies by both Freddie Mac and Standard & Poor indicate that 63% of sub-prime borrowers actually could qualify for conventional loans with much more favorable interest rates and closing costs.

There are legitimate lenders plying these waters. The industry typically deals with people who have bad credit histories. In return for taking the risk, it is certainly reasonable to expect lenders to charge higher-than-normal rates. It is clear, however, that for many lenders, the earnings far exceed the risks. Gouging is standard operating procedure.

The cushy profit margins have attracted the attention of Wall Street. Business Week reports that well-established firms, using subsidiaries with "quick" and "easy" names, are establishing check-cashing shops, payday advance stores and even title-loan businesses. Lehman Bros., Merrill Lynch, Bank of America and others also are venturing into sub-prime mortgage lending. The dollar amount of sub-prime loans handled by such firms last year -- $60 billion -- is up 20-fold from five years ago.

Time for an intervention

Ostensibly, they are classin' up the joint. Billy Webster, a former Clinton administration official, is a partner in a chain of 1,300 payday-advance stores called Advance America. "We're trying to professionalize this business, clean it up, change the way it works," he told Business Week.

Given the degree of abuse in the industry, though, it is unlikely that scruples suddenly will emerge from within. Congress and federal banking regulators should heed the warning of Greenspan and consumer advocates, and start rapping on those plate-glass windows.

Strict interest-rate caps, fee limits and a few shark barbecues are easy to justify and long overdue. It should not take the world's biggest conscience to craft reforms that will generate a healthy profit for financial institutions and provide a useful service to the poor.