Gangster lobby makes NH Senate an offer they can’t refuse

by lestro

I have never taken out a payday loan and have only been in a payday lender one time while looking for a money order. I do, however, live pretty much paycheck to paycheck and lord knows i am one family illness or blown gasket from needing a quick couple hundred bucks.

Payday loan establishments are often labeled derisively as “predatory lenders” and while there is some truth to that, the industry is being unfairly targeted across the country.

The idea is simple: Borrowers in need of a quick influx of cash borrow somewhere between $100 and $500 for a short term, usually until the borrower’s next payday. The cost of such two-week loans run between $15 and $30 per $100 borrowed, but if you miss the payment interest and fees really start to pile up, not to mention fees on the bounced check you gave the lender.

But, of course, if you don’t have enough in your paycheck to survive to week’s end, a payday loan can provide a quick influx of cash, but since you are short as it is, paying it back from the next check tends to leave one even shorter for the next pay period, trapping the borrower under continuously compounding mountains of debt.

The commercials show actors, mostly minorities as they industry realizes that, like liquor stores, the best way to drum up business is to put these places into struggling neighborhoods often populated with minorities. The well-dressed actors talk about needing an advance for a new apartment or a couch or a car repair or something and of course shy away from the whole compounded mountain of debt thing.

The practice is legal in 37 states. But because of the revolving door into and out of these establishments, many of those states are seeking to either highly regulate or outlaw the practice, choosing to blame them as a source for continued poverty instead of recognizing them as a symptom of a much larger economic disparity and issue.

Today we get word that the state of New Hampshire – you know, the “live free or die” people – has taken a step to further regulate this industry, but the laws have a deeper goal, according to the Concord Monitor (emphasis added):

New Hampshire’s payday lenders will likely close shop next winter. The Senate yesterday approved a tight cap on payday and title loans, a measure that supporters and detractors agree would put the industry out of business.

Well now, that seems awfully unamerican.

I recognize that these places do tend to prey on the poor among us, but what happened to “caveat emptor”? You know, “buyer beware,” one of the bedrock principles of capitalism. I feel bad for someone who gets trapped in the cycle of this, but the fact is they either knew what they were getting into or didn’t bother to read the contract.

And why should I lose one of my options because some other jackass can’t handle their finances?

Besides, no one seems to be fighting to shut down the credit card industry, which traps millions of middle class people into their interest prisons for their entire lives, and Congress is even looking to bail out the sub-prime mortgage industry, another area where millions of people failed to read the fine print and got in WAY over their heads.

And in both of those cases, the terms of the loan can change pretty much at any time, especially credit cards. A friend of mine tell the tale of his father, who pays off his cards every month (known as a “deadbeat” in the credit industry. Think about that little bit of nomenclature for a second…) missing a single payment on one card and seeing all of his rates across the board shoot way the hell up.

Because credit card companies are allowed to use ANY little reason to jack up interest rates on cards that have nothing to do with the original missed payment.

Yet it’s the payday lenders they go after.

Meanwhile, the subprime lenders, who loaned exorbitant amounts of money to people they knew would end up paying crazy amounts of interest and getting trapped under the debt, are asking for bailouts – which they will probably get – because they loaned money to folks who now can’t pay it back and their books are looking a bit red these days.

It seems to me this reeks a bit of that soft liberal elite racism that permeates the country. Like “well, the white folk going into debt knew what they were getting into, but these poor little brown people in the city are obviously too dumb to know what they are getting into, so let’s help them out.”

I hate that. And the libertarian in me boggles at the very notion of government killing an industry because some people can’t use it. This is America and we all shouldn’t have to put our heads down on our desk because one kid can’t keep his fucking mouth shut.

It’s part of the same lowest common denominator thinking that says one guy can’t talk on his cell phone and drive at the same time so I can’t do it either. Or some people can’t control their appetite and get super fat so now none of us gets to eat transfats.

But maybe there is more to this. Maybe there is a deeper force at work here. A deeper look at the Monitor article gives us this:

Sen. Bob Clegg recounted times of struggle in the 1970s and 1980s when he had to turn to the “black market” to tide him over. “You can fail, or you can take another chance,” said Clegg, a Hudson Republican. “My position, I took another chance.”

He would be too embarrassed to go to a welfare office, he said, and would rather “stand tall, make my deal with them and then make my payments because that keeps me a man.”

A ha! That’s it! The mob got the to New Hampshire senate (all 22 of them…) and is demanding they rub out these business so people go back to the old ways of borrowing money from bookies and loan sharks, where getting trapped into a cycle of debt can mean losing a knee or pinky toe.

But maybe that’s not a bad thing. I mean, I, for one, am much more likely to pay back a guy standing on my porch with a bat than I am a faceless piece of paper that tells me i am sinking further and further into a debt i can’t get out of…

Either way, let’s start addressing the reasons people need to get these short-term loans (universal health care would be a good start) instead of limiting the options of responsible people who for some reason need an extra $100.

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