A payday lending store closes in Washington State:
Last year, the Washington state legislature passed serious new restrictions on payday loans: small, high-interest loans that are essentially advances on your paycheck. But did Olympia go too far?
“I’ve been doing this since 1989,” said Kevin McCarthy, owner of the local Check Masters chain, which specializes in payday loans, check cashing, and other financial services. “We knew it wouldn’t be good. I don’t think any of us realized just how catastrophic it would be.”
The new rules, which limit customers to 8 loans per year at any Washington institution and puts a $700 cap on each loan, have cost McCarthy his business. Revenue was down 60 percent in the first half of 2010, and 12 of his 22 stores have already closed. The rest will shut down within months, and his 150 employees will be looking for work.
How is this good for consumers?
The guy couldn’t make a profit doing 8 loans a year per customer?
His revenue was down 60%, which might be construed to mean that before the limits the average customer at this chain had 20 loans a year!
So much for the “occasional, short-term use” you guys peddle to the media. You can’t stay in business unless a sizable fraction of your customers borrows again and again and again and again….