A local official in Tennessee wants to add a tax to payday loans. An articulate representative of the industry explains why that is a bad idea.

Ryan Harris, a spokesman for Cleveland, Tenn.-based Check Into Cash, which operates a store in East Ridge, said the company would not welcome the fees.

“Our company pays numerous different kinds of taxes,” Harris said. “Each transaction is regulated at the state and federal level, as well as providing jobs and paying rent to local landlords. Obviously we would be strongly opposed to being singled out for any kind of additional tax.”

The Memphis, Tenn., newspaper chimes in on the Mississippi situation:

Dan Robinson, president of Financial Services Center, was quoted in the Jackson Clarion-Ledger newspaper as saying the legislation reducing allowable interest charges would run payday lenders in rural Mississippi out of business.

Opinions are mixed about whether that would be good or bad for rural Mississippi.

How is taking away consumer choice, shutting down businesses and killing jobs a possible good thing?

From a story about payday lending/financial reform in the Chattanooga Times Free Press: 

“You don’t sell salmon for $14,000 a ton; you sell it for $7 a pound,” Mr. {Allan} Jones said.

From the Tennessean

At least two or three times a week, a customer walks into an Advance Financial store in Middle Tennessee wanting to use a state unemployment check as proof of income to take out a payday loan.

Of course, federal law says lenders can’t discriminate on the basis of income.

Payday loan customers are banked!   From this frustrating story: 

Memphis Mayor A C Wharton Jr. gathered about two dozen bankers and finance professionals in his seventh-floor conference room at City Hall Wednesday to launch an ambitious financial literacy campaign.

Dubbed “Bank on Memphis,” its goal is to bring into the financial mainstream tens of thousands of Memphians whose paycheck-to-paycheck existence makes them more familiar with high-interest payday loans than no-fee checking accounts.

Haven’t heard much about this, but we’ll keep an eye on it.  From the story:

Today, legislators in the Tennessee House Utilities and Banking subcommittee will have the chance to stand up for working men and women in Tennessee by saying 100 percent APR is enough for predatory payday lenders.

A 100% APR equals a $3.84 fee.   In other words, it’s a ban.

From Check into Cash’s Ryan Harris in today’s’ Chattanooga Times:

The Times showed a lack of understanding about the payday lending industry in its recent editorial (“The financial reform test,” Saturday, March 13).

Tennessee law does not allow payday lenders to charge one cent of interest and also does not allow loan rollovers. In fact, Tennessee has such a strong regulatory structure for payday lending that its laws have been copied by other states.

Payday lending is the most transparent financial product on the market with simple, one-time fees that are capped at $30 in Tennessee. These short-term loans cannot fairly be judged on an annual interest rate. In Tennessee, the cost of a payday loan is between $15 and $17 per $100 borrowed and the loans cannot be rolled over at additional costs. State law also limits the amount of payday loans to $300.

There are only so many things one story can get wrong.

The media continues to be surprised that the industry is working hard to protect its customers, employees and shareholders.

An editorial in Memphis’s Commercial Appeal categorizes some state representatives:

Consumer-minded legislators have tried for years to rein in payday loan and auto title pledge loan purveyors and the like.

Since when did restricting consumer credit access make one “consumer-minded?”

A store manager writes a compelling letter to a Tennessee newspaper:

In addition to serving as a resource for temporary credit, the industry contributes to the local economy – providing jobs that include health benefits and competitive wages, hiring local vendors, renting storefronts and using other local services.

For the sake of its citizens and sustained economic development, you would think it would be more beneficial for a city to keep their successful businesses open, rather than trying to zone them out of existence. A zoning ordinance will send the wrong signal to the business community – generating fear of being shut down by further regulations.