Katherine Mangu-Ward wrote a tour-de-force of a feature story in October 2009’s Reason Magazine describing how many people have come to rely on payday loans to make rent or utility payments. Indeed, in many cases, payday loans are the only method that the working poor have to stave off eviction or cancelled electricity. Yet Washington State has now ensured that those same people will no longer be able to appeal to pay day loan shops when they are in a tough spot.

”There’s still high demand for our product but we won’t be able to feed it,” said Joe Brown, general counsel for the Check Masters chain. The new law ”will push people to other forms of short term credit, turn to sources that are not subject of regulations, such as online lenders that operate off shore.”

Brown said he expects the new law to hit smaller chains and mom and pop outlets — like Weaver’s — harder. He said the profit margin for the payday industry is not high, and smaller chains won’t be able to sustain a cut to their customer base.

Exactly.  Reduced competition has never benefited the consumer.

Washington’s new state laws to curb payday loan abuse are equally tough on both short-term borrowers and their high-interest lenders. Starting January 1, no one can take out a payday loan that totals more than $700 – or one-third of their gross monthly income – and lenders can check the borrower’s loan history on a statewide database. The maximum number of payday loans that legally can be issued per person in a 12-month period is eight.

Lower Columbia CAP is gunning for the business of payday lenders — minus the high interest rates that cost consumers millions nationwide each year.

The area’s largest social-service agency is hoping to start a community bank that gives low-income people a low-interest lending option.

Data from a year-long pilot program indicates a need for more loan options for low-income residents, said Marcel Goulet, director of CAP’s Financial Independence Center.

The number of payday lenders dropped slightly in Washington state last year but the total amount of money loaned grew a bit.

According to the Washington State Department of Financial Institutions (DFI), there were 133 licensed payday lenders with a total of 717 locations in the state last year, compared with 138 lenders and 729 locations in 2007. The lenders made fewer loans last year — 3.196 million — compared with 3.26 million made in 2007, but the total amount of loans rose to $1.31 billion last year from $1.29 billion in 2007.

The payday advance industry exists because we offer our customers a product that is more desirable than the alternatives.

You just can’t say it any better than that.