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Editorial in VP tells PD Lending story

Posted by Stephen on February 18, 2007

Give no favors to payday lenders

The Virginian-Pilot 

Here’s the clincher when it comes to proving that payday lending is a really bad idea.

Folks on both sides of the argument agree that such loans – with annualized interest rates approaching 400 percent – ought to be forbidden for military personnel.

And why would that be?

Because it violates conscience to let loan sharks devour the men and women who are sacrificing their lives for the rest of us. Plus, the military brass was screaming bloody murder about the number of low-level servicemen whose security clearances were being jeopardized by crippling debt.

So, why is it OK for thousands of other low-income Virginians to acquire the crippling debt that comes from taking out payday loan after payday loan? And why are consciences not similarly pricked by widows, young families and folks down on their luck who grab for a life preserver only to find that it’s filled with lead?

The payday lending industry has blanketed airwaves and print media with ads showing smiling consumers, thanking them for providing a bridge to payday. What those ads don’t tell you is that one bridge often leads to another and another and another. The borrower keeps getting further and further from shore – until, after a while, they’re too far out to swim back.

Anxious to give at least a show of standing up to the industry, the state Senate has embraced a limit on the number of loans available to any one person in a year. But it’s a stretch to believe that the enforcement mechanism will work.

The far better idea, embraced by the House, would be to cap interest rates at 72 percent. Gov. Tim Kaine is said to favor a cap; he should keep searching for a way to create one.

Payday lenders say that caps would put them out of business. Fine. If the only way they can stay afloat is on the backs of Virginia’s poor, then let them sink.

The views expressed in this editorial do not necessarily reflect those of management of Conservative Viewpoints.

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