Rhode Island legislators will soon debate the merits – or lack thereof – of 2011 H 5562, yet another payday loan rate cap bill. (Photo Credit: CC BY-ND/Patrick Haney/Flickr)

Just as He-Man had his infamous “By the power of Grayskull!” battle cry,  opponents of payday loans continue to cry for cartoon-like 36 percent APR interest – cartoonish because 36 percent has been proven numerous times to be well outside the bounds of practicable business reality. Yet legislators in Rhode Island, led by sponsor Rep. Frank Ferri, D-Warwick, are pursuing yet another bill that would attempt to cap payday loans at the same 36 percent APR. Lenders argue that this will drive them out of the state and drive consumers in need toward unscrupulous loan sharks.

2011 H 5562 would eliminate payday lending in Rhode Island

Volumes of published and unpublished independent research have shown that when companies that offer payday loans with no credit check are driven from a community, the overall financial condition of consumers degrades. Payday lenders don’t need that kind of blow to the bottom line, let alone the state of Rhode Island.

Advance America Vice President Jamie Fulmer told the Associated Press that a 36 percent cap would force Advance America to pull its 20 branches from Rhode Island. As it stands currently, the branches charge $10 for $100 payday loans. If Rep. Ferri’s 2011 H 5562 manages to become law, payday loan businesses could only charge $1.38 per $100 loaned.

“This is not a reform bill; it’s designed to eliminate our industry outright,” said Fulmer.

Anti-payday loans bill offers a single exemption

According to The Providence Journal, 2011 H 5562 offers but a single exemption to the 36 percent APR cap. Organizations that offer payday loans with no credit check can charge as much as 260 percent APR on short term loans. Because such loans come to maturity long before a year is up, the concept of an annual percentage rate on payday loans is not a useful yardstick, however.

Politician cries ‘financial rape,’ business trusts consumers

In a bout of cartoonish exposition, Rep. Lisa Baldelli-Hunt, D-Woonsocket, told local media that payday loans are “financial rape” and that a 36 percent APR is “predatory.” However, as Community Financial Services Association of America spokesman Steven Schlein told The Providence Journal,

“Consumers know what they’re doing. You walk in and you see our rates in big letters on a poster. We’re the most transparent financial service there is.”

Sources

Associated Press

The Providence Journal

Rhode Island General Assembly

Art inspired by an actual abandoned book depository for Detroit Public Schools.

“At what point will America’s public schools turn the corner?” is something many of us wonder – and Detroit Public Schools are a prime example of what has gone wrong. Children deserve a quality education, but too few families can afford to send them to private schools because they a) do not make enough money, or b) are so mired in debt due to bad credit decisions that they live from pay day to pay day. As recent news out of the smoldering crater that is Detroit Public Schools indicates, things are going to get a whole lot worse before they get … even worse. The children of the once great but now recession-riddled city of Detroit deserve more.

Closing 45 Detroit Public Schools a $1 billion plan?

Emergency Financial Manager Robert Bobb says closing 45 Detroit public schools is a $1 billion plan. But how do Detroit Public Schools expect to be able to assimilate the discarded children, teachers and staff into the schools left standing?

Overcrowding and inferior, aging facilities are already a problem –- then there’s the problem of discipline in the classroom. Stuffing more kids in may finally blow the top off the pressure cooker. Associated Press reports indicate an expected drop of 30,000 students over that time (preschool through 12th), but where will they go? Can their families actually afford to move without money loans? People in Detroit are stretched to the limit financially; it’s that way in many Michigan cities, including Flint.

Detroit has lost half its population in the past 50 years

Crain’s Business Detroit brings us that sobering statistic, something typically heard about small towns that depended upon dying industries for their lifeblood. Once Detroit Public Schools has dropped 45 more schools, the automobile capital of America will be that much closer to being either a) a ghost town, or b) being bombed off the map to avoid an “Escape from New York” scenario from spreading. Merging schools won’t address the quality of education troubles that plague Detroit Public Schools and every other public school system from Honolulu to Rhode Island.

Detroit Public School closures to be finalized by mid-April

Until then, read this list and reflect on a dream for a better Detroit that might have been. Without the capital – without the hope – Detroit will fall, strangled, in the dust. These schools will close in the next few years.

(Photo Credit: http://www.flickr.com/photos/shanegorski/ / CC BY-ND 2.0)

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