I once worked for a man, a Republican, at the Department of Financial Institutions that always referred to the payday loan industry as “snakes”. He was right. Yesterday the House tried to round up a few of the snakes.
From the Courier-Journal:
The House passed a bill yesterday to increase oversight of Kentucky's payday loan industry over objections of some lawmakers who argued it might hurt small lenders.
But Rep. Johnny Bell, D-Glasgow, the sponsor of House Bill 500, said it would place minimal restrictions on the flourishing industry that offers high-cost, short-term cash loans to borrowers.
"What I am trying to do is protect the consumers," said Bell, who fended off a last-minute amendment by Rep. Kenneth Upchurch, R-Monticello, to turn the bill into a study of the payday loan business.
Will this bill actually become law?
No, David Williams is going to kill it, again from the Courier-Journal:
Senate President David Williams, R-Burkesville, said yesterday he hadn't seen the bill and said the Senate was busy with other matters, including the budget.
"It's getting a little bit late in this session to pass very many House bills," he said.
Bell is trying to protect consumers from payday lenders that play loose with the law but he is also trying to protect consumers from themselves.
Though people aren't supposed to have more than two loans at a time, research shows some have multiple loans from different lenders and fall behind when they can't keep up with the payments, Bell said.
But the state now has no way to track that, and lenders say they rely on the word of their customers that they don't have more than two outstanding loans, he said.
The sad truth here is that regardless of how many limits are placed on this industry it is consumer driven and it will still victimize its’ customers. Whether some guy in a strip shopping center collects the money or two guys with no necks corner you in an alley the financial result is the same.
This is just another example of government cleaning up what is really a crime, making it look pretty and allowing it to take advantage of the citizens of the Commonwealth.
This payday loan industry is just Loan Sharking with a shell of acceptability just like the Lottery is the Numbers Game run by a state contractor.
Regardless of the limits put on this industry, even if it is made illegal in Kentucky, people will still seek out this service either in the shopping center or a back alley.
Of course if casino's are approved in Kentucky we could franchise out a payday loan operation at each location, think of the money the state would make.
I'm sure Davey would have used the service:
As a means of collecting the gambling debt Davey owes them, Tony and Richie Aprile have been overseeing the purchase of merchandise for Davey's sporting goods store -- and then taking the goods for themselves. The good news for Davey is that he will finally be free of Tony and Richie; the bad news is he'll lose the store, his savings and probably his family.
2 comments:
As a representative of the payday loan industry, I think it is important to point out that research shows payday advance customers are middle-income, working families, 58 percent having attended college, and one in five having a bachelor's degree. Working adults are best served when given a variety of options and trusted to make financial decisions based on what's best for them and their families.
Payday advances play a necessary role, providing hard-working people with a reasonable, well-regulated option for meeting unexpected or unbudgeted expenses and other short-term financial needs. Regulators confirm that, out of millions of customers, there are very few complaints.
I love that a politician is calling someone else a snake! Pot, meet Kettle! This is so ridiculous. We need to stop blaming the payday lenders for everyone else's irresponsibility! If I borrow 100 bucks from a friend, and am not able to pay it back, I don't blame my friend for lending me the money! That is just stupid. So why are we blaming our payday lender friends for providing a great service? In a recent article by ex senator and presidential candidate George McGovern, he says, "[p]ayday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy," Mr. McGovern rightly poses the question: "Why do we think we are helping adult consumers by taking away their options?"
Later in the article, he says, "[t]he nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else."
This is how we need to look at this topic. Leave the payday loan stores alone and look for other options. Instead of taking away payday lenders, beat them at their own game by giving consumers even more alternatives!
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