If the D.C. Council votes on the merits today, it will ban the most exploitative practices of payday lenders. Council members have heard powerful testimonials from those victimized by exorbitant interest rates.
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If an individual loaned money to someone else at an annual rate of 400%, we would typically call this an act of loan sharking. If a bank or other financial institution charged this rate, the charge would be usury. However, when an organized business contributes heavily to election campaigns and exploits poor people, we call it the pay day loan industry.
This group of "super predators" siphons off funds from a vulnerable segment of our society. Akin to the "rent to own" furniture business, pay day lending is nothing more that legal robbery. It exploits individuals who have few other sources to turn to for loans, who are highly likely to default (and roll over into another and then another loan), and who are the least likely to complain to authorities or to take legal action.
Ever notice the distribution of business that prey on the vulnerable? This legalized loan sharking industry contributes to keeping people in poverty. This is one business that should be regulated out of existence. Congratulations to the elected officials of the District that stood up to the lobbyists and enacted legislation to protect citizens. Now when will other elected officials develop the same courage?
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