Wednesday, April 22, 2009
Pay Day loans are of the devil! Keep them at least a 1/2 mile apart!
Here is a story that actually plays to yesterdays post on economic regulations. This legislation was voted on last night by the Salt Lake City Council and is a great example of not only a poorly written piece of legislation, but a demonstration of how such efforts do nothing but place an annoying burden on a legitimate business.
Here is Salt Lake City, a group of Utah religionists (no clear LDS affiliation) fought to see legislation passed that would not allow for those title loan/payday loan and check cashing businesses to operate within 1/2 mile of each other. The issue the proponents of the legislation claimed was that individuals are getting loans through one place and then compounding their debt by going to another close by establishment and getting another loan to pay off their first loan. This pattern is repeated over and over again creating increasingly binding debt. The group representative went so far as to say that these businesses are predators to the low income individuals and the uneducated. I say you can't rape the willing. Unless these individuals are legally handicapped, then they are cognitive adults capable of self-improvement as much as they are capable of destroying themselves.
This group is right however, in that this kind of debt service is a bad idea. On the other hand, it is not illegal, and eventually that person will be cut off by one of the lenders who will not be willing to take the risk. If a lender is willing to take on the risk of not getting paid back, that is their issue and it should be of no concern for the city. Plus, anyone who is desperate and stupid enough to bounce this kind of debt around like that is going to be willing to drive or even walk further than 1/2 mile to find another pay day loan to satisfy their debt addiction.
As far as I see this legislation, no one wins. Agency in this case, the right to fail, has been scaled back, and the right for business owners to decide when they don't want to take a risk on a loan is interrupted. That is of course if this legislation does anything at all. One person in the video feels that such legislation might actually injure those "being preyed upon" cause because it would decrease competition allowing these lenders to charge more for their services instead of a competitive rate. Additionally, 1/2 a mile is nothing as far as a deterrent. People can bike that is less than a minute. Great deterrent people! Well crafted morons!