our lawmakers is to make it easier for payday lenders, by capping their interest rates at a meager 391%.

News > Politics > Payday Lending/Rape

Payday lending works like this: Some poor sap has a job and a bank account and she can’t cover his bills for the month. She’s just a bit behind on the rent or her gas bill and she needs an advance on her paycheck. ...

So, she goes to the payday lender.

Once there, she opens a line of credit. The lender agrees to give her an advance on her next paycheck and she in turn writes a check from her bank account for that amount, to the payday lender. It’s post dated and the lender agrees not to cash the check until lady’s payday. Oh, and there’s a massive fee, typically around $17 for every $100. For one payday loan, that’s not much. But it never ends there. Oh, and they don’t have to pay that fee until their next paycheck. That, of course, causes a problem on the day they get their next paycheck. It’s literally built as a trap. ...

These people become sharecroppers on their own life, giving the lender a never-ending share of their future earnings. Seventy-five percent of borrowers roll their loans over to the next week. The average borrower will pay $500 in fees for a $300 loan. Annual interest rates for payday loans average over 400 %. Consider the fees charged by one payday lender in DC as reported by The Washington Post:

If you qualify, the fee for borrowing $300 is $46.50. That was not for a year -- it's for seven days, although the terms can vary. How much interest will this payday loan cost you? In simple terms, the company is charging a $15.50 fee for every $100 that you borrow. On your $300 payday loan -- borrowed for a term of seven days -- the effective annual percentage rate is 806 percent.

Today America is chock full of payday lenders. It’s one of the fastest growing businesses in the USA. It’s a $40 billion industry. There are now over 22,000 payday lenders serving over 10 million Americans. Of course, those 10 million Americans are the working poor, the ones who can least afford a 911% interest loan. Many of them feel they have no choice but to take out a loan. That’s why all the payday lenders are in the worst part of town. They are predators, seeking out the weak
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At this time, with our distribution of wealth completely out of whack, when our usury laws need to be changed to give the poor a chance and bring stability back to our country and resurrect our manufacturing base, the response of our lawmakers is to make it easier for payday lenders, by capping their interest rates at a meager 391%.

As I said last week, we are doomed. ...