NYTs Urges End to Payday Loans « The Washington Independent
Last week, we laid out the congressional battle-lines in the looming fight over how to regulate payday lenders. Today, The New York Times weighs in with a biting suggestion: kill the industry and shed no tears.
Payday loans — advances that are to be repaid on payday — are so burdensome and so pernicious that in 2006 Congress effectively banned them for military families. Given all the problems workers face right now, Congress should extend this protection to everybody.
In the House, Democrat Luis Gutierrez (Ill.) is pushing legislation to cap rates on payday loans at the equivalent of 391 percent per year. In the Senate, Democrat Richard Durbin (Ill.) would cap the rate at 36 percent — in effect killing the industry, which says it can’t sustain profits at such interest levels.
The question now becomes: Will Democratic leaders stick their necks out to take on the powerful payday lenders for the sake of consumers, or will it bow to the $50-billion-a- year industry under the guise of preserving borrowers’ option to pay 391 percent? Congress plans to take up several finance reform packages shortly. We could know the answer soon.