IN 2007 the small city of Mesquite, a suburb of Dallas, was trying to overhaul its ageing infrastructure and faded industrial zones. City officials launched a renewal programme, but found their efforts marred by payday lenders. These are shops that offer small, short-term loans (in advance of payday) on unfavourable terms, and their neon signs hardly suggest a thriving and vital place. “They project an opposite kind of image,” says one city official. So Mesquite passed a strict zoning ordinance that will make it difficult for any new payday lenders to set up shop. The city cannot bar the practice, but it can try to elbow it out.
The payday lending industry has taken several hits this month. On November 6th the Arkansas Supreme Court ruled that large fees for small loans violate the state constitution. In Arizona, voters rejected an industry-sponsored “reform” initiative that would have done away with a sunset provision on payday lending in the current law. In Ohio, voters decided not to repeal a law capping annual interest rates. This could mean the end of payday lending in those three states.
Calvin rightly concluded that Old Testament prohibitions against usury do not bind Christians. We may loan money at interest [i] to the extent consistent with the Law of Love[/i].
Payday lenders often charge unconscionable rates of interest—rates that would have been illegal in virtually any U.S. state before 1980. We need some limits here.
We have that problem here in the Central Valley of California, but most of their customers in our area are low-wage workers who have no checking accounts because they can’t meet the banks’ requirements, and they’re the ones who can least afford it. They live from one payday to another. Yes, some controls do need to be added, but along with that, there needs to be more understanding of the problems that these workers face every day in trying to support themselves and their families.
Good news for pawn shops!
Irenaeus, we certainly do need some limits. These loan shark operations prey upon the working poor because the big banks don’t want to be bothered with small amounts. I wouldn’t allow banks to ‘opt out’ of servicing small accounts….especially when they’re all begging for our taxpayer funds! It’s an outrageous scam!
This should not be going on. You can thank Senator Bob Corker for keeping his cronies, like Check Into Cash owner W. Allan Jones, in business. For even more disturbing information, read below:
http://garyrivlin.com/2010/06/pioneers-of-subprime-allan-jones-and-the-payday-loan/