A terrific guest opinion piece today in the Spartanburg Herald Journal from State Assemblyman Harold Mitchell:
Critical resources, including the time and attention of S.C. lawmakers, should be focused first and foremost on rebuilding our economy, mitigating the rising unemployment rate and diminishing the level of poverty in the state.
Banning payday lending — or even pursuing an effective ban through the imposition of a 36 percent annual percentage rate (APR) cap on payday lending fees — will not alleviate these problems. Poverty and financial instability — especially among African-Americans — is not a result of the payday lending industry; it is a result of an extensive list of statewide deficiencies including health disparities, a lack of employment opportunities, crime and poor public school performance.
Opponents of the payday advance industry tend to paint all borrowers with the same broad brush — emphasizing anecdotal stories describing payday lending customers as poor, uneducated (and often minorities) in cycles of debt. In reality, the industry’s national data show the average payday loan customer has an annual income of $41,000 and has some college education. Furthermore, among households within a one-mile radius of a payday advance store, 63 percent of the households’ occupants are white, and 50 percent own their own homes.
Assemblyman Mitchell is more in touch with his constituents than the so-called “consumer” groups that think they know what’s best for everyone.
Given the rising levels of unemployment, payday loans must be an increasingly risky trade. What happens when loans are made against income that may be lost at any time?
Given the rising levels of unemployement how would putting payday lenders out of business help that number from rising. If you take into account the real fact that numerous individuals have poor credit and are unable to get loans with other banking institutions then payday loans are a plassible alterative. The consumer needs to be mindful of the possibility of the loss of job and that they need to stay within their means when getting a payday loan. What happens when income is lost is not an question that could possibly be answered. If the consumer know they are going to lose their job then they should be loaning from anyone….payday loan, credit union, banks, credit cards. This is how we got into the position we are in with the economy. Why make it worse and have no way for those people who don’t qualify for a small loan from a bank be punished because you personally don’t understand the industry and the people who use it?