When Mr. J. went to his local bank here for a personal loan of $1,000, he couldn't even get $1. The bank wouldn't even take his application. So he went around the corner to a bar and, without a credit check, got his $1,000 within half an hour. His interest is a whopping 5 percent a week until he pays off the principal. And if he doesn't pay the interest, he could pay with his life.
The tightening squeeze on legitimate credit in the United States, law enforcement officials say, could drive many Americans to the sharks -- loan sharks, who thrive when legitimate sources begin to dry up.
"Loan-sharking was around when there wasn't tight money," says Federal Bureau of Investigation spokesman Otis Cox. "But it's not hard to see it's going up now."
In fact, even when the economy is relatively stable, loan-sharking accounts for almost half of organized crime's $25 billion annual business in the US, law enforcement officials say.
Atlantic City, N. J., law enforcement officials declare that this criminal loan business is booming in connection with casino gambling and burgeoning real estate development.
The Federal Bureau of Investigation (FBI) is stepping up its probes of loan-sharking activities brought on by the credit squeeze. Some close observers even say they believe the recent murder of Angelo Bruno, reputed Philadelphia crime chieftain, was tied in part to the desire of other crime bosses to cash in on the Atlantic City loan-sharking pie.
Tony Vaccarino, an FBI agent in Washington, D.C., who specializes in tracking loan-sharking corruption, says: "Our society, our economic situation, is built on easy credit. If you're going to cut off an avenue of easy credit, you're going to send people to the sharks."
And like the creatures they were named after, credit sharks can be deadly if they are hungry for their money.
"Historically, it's a violent crime," agent Vaccarino notes. "There's the possibility that many unsolved murders are from loan-sharking and gambling debts not paid."
Nationwide, in fiscal year 1979, 34 defendants were prosecuted by the US Department of Justice for violating the federal anti-loan sharking statute. But these prosecutions don't include those taken under the federal statute against "racketeering influence and corrupt organizations."
And it is the latter law which could be the biggest help in these tight-credit days, because it covers racketeers who try to take over legitimate businesses by first dangling the carrot of illegal loans.
Meanwhile, area law enforcement officials are keeping close watch on the use of credit at Atlantic City casinos. Gamblers can get chips to use at the gaming tables by signing "markers." These are actually personal checks which the casino operators accept from gamblers with good credit ratings. State Attorney General John Degman and other officials are concerned that a gambler who loses big at the tables and can't "make good" on the check might be prosecuted for writing bad checks.
At least one New Jersey state legislator is drafting a bill which would cut back the hours during which casinos operate. The aim is to prevent gamblers, many of whom have been plied with free drinks, from taking unwise advantage of this easy source of credit if they are down on their luck and need more chips in a hurry.