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Payday lenders get no bailouts
(by Dave Lange - February 25, 2009)
Payday lenders get no bailouts
Here's a question for the 72 percent of Ohio voters who cast their ballots last November in favor of driving so-called payday lenders out of business. Why are they still in business?
If you ask the conservative Ohio Legislature, which passed the Short Term Loan Act that provoked the ballot referendum, the answer is that the state law left a gaping loophole for the lenders to strut through. No surprise there. If you ask the liberal editorialists who proselytized to the voters about the degradation of payday loans, the answer is that the sleazy lenders would slither through any little hole.
The real answer is that there is a demand for the services of payday lenders. People who need 50 bucks or a couple C-notes in a hurry borrow from quick-loan providers who demand that it be repaid in two weeks with an annual interest rate of 391 percent, because they don't have many alternatives.
Payday lenders are in business, because the banks and other financial institutions with supposedly higher ethical standards do not serve such clientele. Those piddly loans aren't worth their time and red tape. Why should they bother with riffraff and petty cash when they can blow billions on sub-prime mortgages and other hocus-pocus then beg the taxpayers for bailouts and float away on golden parachutes?
While the agenda setters, right and left, were fretting from their ivory towers over payday lenders, the super loan sharks were laughing their way out of the bank vaults. The snooty watchdogs couldn't see the quarter-million-dollar mortgages being doled out by slick suits in homogenized offices of household-name money launderers to income-deficient social climbers. They were too busy sniping at their definition of lowlife.
Welcome to the high life, where the latest fashion is a $2.5 trillion rescue plan for the banking and financial corporations that wrecked the American dream, not to mention the economy. Welcome to easy street, where PNC Financial Services Group Inc., of Pittsburgh, not only can buy out National City Corp., of Cleveland, with its taxpayer bailout, but it can reward the abject failure of 14 outgoing executives with $50 million in payouts.
Meanwhile, back on the mean streets of Ohio's urban neighborhoods, those payday lenders are still dishing out two-week loans with triple-digit interest, because they're not as dumb as the two-bit politicians and two-faced media trendsetters wish they were. There's something about the selective free-enterprise system that actually works. It's called supply and demand.
They may not turn out in droves on Election Day, but, on any given day, some of our fellow citizens need some money, and they need it now. Maybe it's for a new radiator on an overheating car that's needed to get to work on Monday, or maybe it's a part for a broken furnace that's needed to keep the kids from freezing on a school night.
That loan is not waiting at the fancy bank with the signature skyscraper, overblown executives, overextended mortgagors and a billion-dollar bailout. But it is available at the corner loan office. When payday rolls around in a couple weeks, the borrower in need will pay it off in full, and the $20 or $30 in interest will be worth every cent.
Who are we to tell that guy who needs some cash and needs it now that he can't have that new radiator for his car or that part for his furnace? That's right, we're the ones bailing out the banks.
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