Idaho Follows the Center For Responsible Lending’s Command

Idaho aims spud gun at cash advance

Sarah Wire of Washington State’s The Olympian newspaper reports that lawmakers in Idaho will consider two bills that should compel cash advance lenders via incentives to make sure they’re licensed before lending to Idaho residents.

These bills would invalidate unlicensed loans and allow Idaho’s Department of Finance to issue cease and desist orders and sue unlicensed lenders. The primary targets of these bills, according to Wire, are those Internet lending companies who don’t happen to have a license.

Having a license is reasonable

The Idaho House bill would “require payday lenders to give consumers a list of credit and debt counseling services and would create an optional payment plan for borrowers who can’t pay off the loan,” writes Wire.

Republican Sen. Shawn Keough told the Associated Press that “online payday lenders who cater to Idaho borrowers should adhere to the same consumer protection laws as payday lenders who operate actual stores in the state.”

But Idaho’s true motivation becomes clear

Democratic Rep. Grant Burgoyne wants to cap cash advance interest charged to borrowers. Democratic Sen. Elliot Werk wishes to “add more regulation to payday loans.” People like these buy into the “debt trap” fallacy perpetuated by the Center For Responsible Lending. However, multiple studies have shown that not only are rate caps and other heavy restrictions upon cash advance loans unnecessary, but they are harmful to the population who need help to absorb the financial shocks that emergencies can cause.

What I’d like to see are politicians who do their own research instead of depending upon the bleating of big-money shadow organizations. I also hold out hope that consumers will take the information lenders give them about terms and costs of cash advance loans and make an informed decision about what is best for them in their situation. The wide majority repay their loans on time, but the small minority who have trouble – even with installment plans – give grist to a lazy media who sees no reason to do actual research. They seize upon the sensational because too many viewers continue to eat it up.

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