Bill calls for interest rate cap
Following the introduction of a bill involving payday loans in Utah, an editorial in the Deseret News discusses the topic. The bill seeks to put a 100 percent annual interest rate cap on payday loans. Here are some snippets from the commentary piece.
Not big fans
The editorial starts off by letting readers know exactly where the newspaper’s editorial board stands: “Regular readers of these pages know we’re no fans of the payday lending industry.” Whew. Glad we got that out of the way.
As you can imagine, the editorial goes on to say “Bill good. Payday loans bad.” OK, that is not a direct quotation.
Bill details
Regarding the 100 percent interest rate cap on payday loans, Deseret News says:
The industry is crying foul, which is hardly surprising considering the number of these lenders along the Wasatch Front.
I wonder if it ever occurred to the writer that there are so many lenders because people, you know, need them.
Check your facts
The editorial also says that payday lenders are saying the 100 percent interest rate will run them out of business. Deseret news says:
This is a little difficult to rationalize when some states have placed caps at 36 percent or less.
It’s true that many states have placed interest rate caps on payday loans. It’s also true that in many of those cases, it has driven a huge number of payday lenders out of the state. See: Ohio, Oregon, New Hampshire, etc.
Red state of affairs
Though a Democratic representative wrote the payday loan bill, Utah is known as a very conservative state. Conservatives are known for encouraging personal fiscal responsibility. It would be interesting to know public opinion regarding the Deseret News editorial.
The editorial acknowledges “a need for more consumer education about the long-term consequences of quick loans.” What it doesn’t acknowledge is that regulating payday loans encourages less personal responsibility, not more.
It is becoming a fad to blame the short term lending industry even though it was the main stream banking industry that has wrecked the country.
Graham – right on. I love how social crusaders try to implement solutions that have nothing to do with the problem. Payday loan lending isn’t predatory, there’s a legitimate demand for it. People are driven to it, and they are for a reason. Real wage purchasing power has dropped over the last fifty years, yet middle class income hasn’t gone up to counter it. In fact, it’s gone the other way. One segment of society gets enriched while the other languishes in debt, and bearing that in mind, are payday loans anywhere close to the things we should really be worried about?