Payday lending is a very profitable business. We know these places well here in Minneapolis. They will lend anyone money, and the interest rate is really exorbitant. Some reports are that the interest rate can exceed 250% on an annual basis. Of course they loan it for a couple of weeks so the rate doesn’t seem that high. People can quickly see a few hundred dollar loan multiply into the thousands, and then the lender will go to court, get a judgment against the checking account or the savings account, garnish wages, and/or force the borrower to sell property to pay them. This is a predatory attack on low-income people who often just need money for food, rent and utility bills.
The Minnesota House has passed a bill to restrict how many loans a person can take out in a short period of time, restrict the interest rate, and put some controls on collection practices. Senator Jeff Hayden is the author of a companion bill in the Senate. I spoke to him, and he first made it clear to me that he doesn’t believe his bill goes far enough, but he thought it was the best he could pass at this time. Well, it turns out that even within his own party he is having difficulty getting the votes to pass it. There is no support at all on the Republican side, according to Senator Hayden. The industry (did I say it was very profitable) spends millions in campaign contributions to legislators, and you would have to be almost as cynical as I am to believe elected officials would sell out their constituents for a lousy buck.
Jeff said that all of the Minneapolis delegation is good on the bill, so thank the Lord for that anyway.
People who use these outfits get into this debt spiral that they just cannot get out of. They end up living to pay the interest. What should we do?
First. Don’t borrow money from a payday lender.
Second. Don’t let your friends and loved ones borrow money from a payday lender.
Third. If you have any friends in “Greater Minnesota” have them call their senators and tell them that the people in “Lesser Minnesota” (that’s us) want to kick the predators out.
Fourth. What we really need is a system that does not take advantage of the least well off for the benefit of the rich. We need a guaranteed annual income, a way for people to get their bills paid without making a deal with the devil, and we need good jobs that people can make enough money to live on.
Come on, is that too much to ask?