Payday Pundit

And fighting the IRS over 9 cents.   Some great new posts at Walletpop.

President-elect Obama’s stimulus plan includes a $500 “tax cut” (really a check in the mail) for individuals and $1000 for couples.   

We’ll, of course, have to pay this back with interest in the form of higher taxes down the road. 

Kim Anderson of CL Verify has accepted a position as a board member of OLA. 

From Bankstocks.com:

Sheila Bair is the media’s favorite financial regulator. In fact, she is a disgrace. She didn’t do consumers any good when she took a powder on Wal-Mart’s banking application, or offered her small-dollar-loan plan. And she’s certainly not doing them any good when she pushes for uneconomic loan mods, which will only delay the inevitable. Worse, she’s not doing the banking system any good, either.

Britains are abandoning their pets to save money.

At least according to the editorial writers at the St. Louis Post Dispatch: 

The rules, which were more than 18 months in the making, will be an improvement, but not for another 18 months. The Fed delayed implementation of the new rules after the credit card industry complained about the administrative problems the new rules create.

Consumers must hope that the incoming regulators designated by the Obama transition team will be more attuned to the problems of ordinary Americans than to the problems of the credit card industry.

We agree with the thrust of this article, payday loans do well because bank fees are high.  However, more government regulation is not the answer, competition is.

This newspaper in Amarillo, Texas ran the same Los Angeles Times story discussed below about more middle class customers using payday loans.    Check out the headline they put on the story:  “Payday Loans Become Dept Traps for Many.”

The story is about the middle class turning to payday loans, but they just couldn’t help themselves.

The Los Angeles Times story from last week about the middle class using payday loans more and more is getting pickup in other papers.  Today, it’s in the Atlantic Journal Constitution.

Update:  A reader alerted us to this pickup of the story in the Boston Globe.

The Virginia Daily Press is in a tizzy because payday lenders are innovating and changing their service to make sure they can stay in business:

For example, in September payday lenders received permission from the State Corporation Commission to offer open-end loans at their payday loan locations. Open-end loans are loans with no set time of repayment. The borrower is only required to make a periodic minimum payment, and the loan can continue in perpetuity. The biggest payday lender in Virginia started doing open-end loans on Dec. 1, charging an interest rate of 365 percent if the borrower allows the lender to automatically deduct payments from his account and 456 percent if he doesn’t.

So they got permission from government regulators to change their service. How brazen?  

The critics have things exactly backwards.  During this period when credit will remain tight, payday lenders are a valuable source of credit for working people.