In a thinly veiled attempt to ban payday loans, Salt Lake City has adopted a “no-clustering” rule that will restrict new check-cashing and no fax payday loan businesses from operating within 600 feet of one another. This is a move that Salt Lake City Council has resisted for some time, on the grounds that these businesses were being singled out unfairly while larger financial service companies were being spared such scrutiny.
Salt Lake Tribune
February 2009 will be the earliest that newly adopted rules can take effect.
They came to agreement in principle, but not on all the details
Here’s where the true method of Salt Lake City’s government becomes clear. The city’s Planning Commission recommended banning lenders from near schools, churches and government buildings. Since there are many of each of these throughout the city, many on the council argued that the idea is ridiculous. It would unjustly kill the industry’s ability to operate in Salt Lake City.
Councilman Van Turner, according to The Salt Lake Tribune, went so far as to express concern that something had to be done since Utah has no usury laws. Yet is that such a bad thing? A legitimate argument can be made that regulating away payday loans companies will drive consumers in need to dangerous alternatives.
Mormons against faxless payday loans?
“We’re stronger on this than we are on alcohol laws,” Turner went on to say in the Tribune article. Which is exceedingly odd, considering the Mormon stance on the consumption of alcohol, derived in large part from their interpretation of 1 Corinthians 3:16-17
Know ye not that ye are the temple of God, and that the Spirit of God dwelleth in you? If any man defile the temple of God, him shall God destroy; for the temple of God is holy, which temple ye are.
Thomas Aquinas
It must be that the “wickedness” of usury knows no bounds, eh? Let’s go to an ancient authority on the matter, St. Thomas Aquinas. His argument regarding the charging of interest (usury) is that it’s wrong because it is charging for both the thing and the use of the thing. He claims it is morally wrong in the same way as if one sold a bottle of wine, charged for the bottle, then charged for the person using the wine to actually drink it. Wait a moment, some states do actually charge for bottles – ever hear of redemption value surcharges? I guess rule of law is good enough for them.
Aquinas’ view seems to overlook basic operating principles of commerce
But let’s look at Aquinas’s argument for a moment as it relates to money and charging interest. If you produced something via your own labor, would you be eager to give it away for free if your livelihood depended upon the production of such goods and services? Of course not – you have to make a living.
Do faxless payday loan companies produce money for free? Do they print it in the back room for customers? Absolutely not – they have access to the money lending via business and banking relationships that must be cultivated – paid for. There is a business exchange going on for the lenders. Why should payday loan companies give away the fruit of their business labor at no cost? Aquinas may be a great logician, but he sure doesn’t seem to understand how to run a Popsickle stand, let alone a no fax payday loan business.
Payday lenders have been well-received in Utah
Again from the Tribune article, Wendy Gibson, spokeswoman for the Utah Consumer Lending Association, points out that the industry is regulated by the Department of Financial Institutions and receives “very few” complaints:
The simple fact is that residents have always needed a source for short-term emergency credit in order to meet the realities of life when living from paycheck to paycheck. This helps regular Utah families avoid higher-costing alternatives such as bounced-check fees, utility-reconnect fees or just the alternative of not getting a car repaired quickly when it is needed for work.
TUNE IN HERE for the conclusion of Salt Lake City’s disastrous decision about payday loans and the possible result!
Interesting Article
It’s too bad that everybody cannot read this excellent article.
Government intervention on payday loans is not necessary.
Well, strong religious views can shape the opinions of the masses.
I fail to see how payday loans are seen as more of an evil than things like credit cards are. Credit cards are only useful for consumer debt, and they aren’t a viable investment like an education, or the purchase of a home, and they definitely aren’t as viable as a short term buffer like a payday loan is.