Conservative Viewpoints

"Government is not the solution…it is the problem" -Ronald Reagan



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Editorial: Cast out the predators

Posted by Stephen on February 3, 2009

Lawmakers miffed that payday lenders took advantage of them should seek more than ‘reform.’

Payday lenders couldn’t leave bad enough alone. Last year, lawmakers “reformed” the industry just the way it wanted. As a way to say thanks, the usury lenders rolled out a “new” product — larger, open-ended loans with unlimited interest rates — that is even worse than the last.

Now the big shots in Richmond know how it feels to be the little guy taken in by payday lenders’ predatory practices. Lawmakers seem reluctant to let the payday lenders have their way with them again. We’ll see.

Payday lenders, car title lenders and the rest of the predatory lending pack claim that if it weren’t for them keeping all the little guys afloat when their cars break down or their children need pricey medication, financial calamity would befall thousands of Virginians. They provide a valuable service, or so they claim.

They can plead their case because few alternatives exist. Policymakers have done little to encourage credit unions and community banks to set up short-term, fair loans to help people in a bind. Nor have they done much to promote or fund programs that would teach people to better manage money.

So, yes, there is a market in Virginia for predatory lenders. And, unfortunately, that market is growing daily with each slowdown and shutdown forced by the recession.

Thousands more hard-working Virginians are hitting the unemployment lines and struggling to pay their bills. Desperate people are less likely to rationally view the consequences of borrowing $1,000 against their car. The fine print doesn’t register when all you can think about is keeping the heat on and feeding the family.

They reason they’ll pay it back, never expecting that their car will go away before the debt does.

Yet, the only bill gaining support in Richmond takes but a passing swipe at payday lenders, prohibiting them from offering the new types of loans. Lawmakers need to do more. They need to offer Virginians the protection that they might be too desperate to seek for themselves.

It’s time to cast out both payday and car title lenders. “Reform” doesn’t work. They’ll just find another little loophole to slip an even greater harm through.

Published in the Roanoke Times 2-01-09

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