Payday loan enablers
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Payday lending is a creepy, disgusting practice in our state. Payday lenders charge hundreds of percent interest on avarage every year. These modern-day Shylocks sue tens of thousands of Utahns for default, cluttering small-claims courts, and cracking down on their financially unsophisticated borrowers.
Naturally, the payday loan industry has the state Legislature tucked safely away in its hip pocket. Last year payday lenders forked over $30,200 to scores of Utah legislators. That's a hefty chunk of cash in a nonelection year.
The results of legislators receiving all this free, no-interest money is disheartening but predictable. In 2007, Rep. Lou Shurtliff, D-Ogden, sponsored a bill that would have stopped some abusive payday loan practices, such as unlimited loans without caps. It died in committee.
This year Sen. Greg Bell, R-Fruit Heights, offered Senate Bill 216. Patterned after regulatory procedures in other states, it would have required payday lenders to be more open in their practices. They would have had to disclose information, including how many loans are made, how often the loans are outsanding or rolled over, what the interest rates are, how many loans default, how many different loans an individual might juggle, etc.
Payday lenders, through their lobbying group, the Utah Consumer Lending Association, opposed Bell's bill, saying the disclosure is not needed because they have so few complaints.
But we wonder: If all is sunny with payday lending, why the storm clouds over providing more information? And why all those small-claims lawsuits? If payday lending is as bright and cheery as its adherents say, the industry would welcome this information to prove how benign and family-friendly its many strip-mall businesses are.
Last week Bell's disclosure bill was killed by a 5-2 vote in the Senate Business and Labor Committee. It was defeated after legislators were convinced by payday-loan lobbyists to drop most disclosure requirements in SB 216. Instead, the committee passed, by unanimous vote, an enabling bill from Sen. Karen Mayne, D-West Valley, that will offer a few tepid requirements that will be useless in reining in the predatory nature of payday lending. Mayne's bill, SB 83, requires quarterly payday lending reports and more loan information to be displayed for customers.
We've learned not to expect too much from our legislators, but we can't help but shake our heads over how persuasive even the slimiest lobbying group can be, when it has $30,200 to sprinkle among Utah legislators.
Reader Comments
I could not agree with your editorial more--AARP has worked on this issue for years, with many states taking action to protect its citizens from these devastating loans. The U.S. military calls payday lending one of the worst predatory lending practices and successfully convinced Congress to limit loans to the military to 36%, yet it is alarming how little is done to rein-in predatory lending in Utah. Editorials like this will help toward educating Utahns about these loans and hopefully seek other alternatives.
Thank you for this article, and for watch dogging this issue. These shameful 'businesses' are a rapidly growing blight on our state.
It is a sad day when a good Christian state like Utah won't stand up. Chapels on every corner and Pay day lending sites to match. Grinding the face of the poor is a poor business. Why can't we adopt the Federal 36% standard? Because, lawmakers don't understand the issue. Centers which cash checks without ID are breading grounds for crime.