Find compromise on payday loans

Payday loan companies are feeling the uneasy pressure that comes from too much attention from the wrong people — Congress.

The payday companies that have operated pretty much out of the public and Congressional spotlight are now right in the middle of it and fighting for their survival.

But should those high-interest, same day loan companies survive at all? Should Congress step up and regulate the controversial loan outfits or just oversee the operations?

The payday loan outfits need both — Congressional oversight and regulation — and even with that, they should be allowed to continue to meet the expectations of the neediest borrowers without financially devastating them at the same time.

The payday loan operations have stepped up pressure on Congress to let them run their business as they see fit. The Online Lenders Alliance was formed in 2005 and quintupled its lobbying expenditures to $480,000 for 2007 and 2008 elections.

In the Senate, Sen. Tim Johnson, who is on the banking committee, was the top recipient of lobbying dollars — $6,900 — and in the House it was Rep. Luis Gutierrez, D - Ill., who received $4,600.

“While they may not be JP Morgan Chase or Bank of America, they’re very powerful. Their influence should not be underestimated,” Gutierrez, who shifted from promoting a ban on the industry to promoting regulations, said.

Sen. Johnson advocates oversight of the industry and is taking a wait and see approach on regulation proposals.

Payday loan companies say Congressional regulations will mean and end to their business and hurt the people Congress is trying to help — the lower income wage earners who find themselves in need of a quick quid.

But Congress acknowledged the high interest rate loans were a problem when, in 2006, they capped interest rates at 36 percent for military personnel. And in South Dakota, the state Legislature regulates the industry with a cap on loan amounts and other restrictions.

For the public, the debate often comes down to personal responsibility versus preying on the needy.

But the truth probably lies somewhere in between and we hope Congress can ferret it out, regulate the industry and meet the needs of the people who have no other options.

Payday loan operations fill a void. Until any person can walk into a traditional bank or credit union and borrow $100 until his or her next paycheck, payday loans will remain the only option for a lot of folks. We can support keeping the quick and fast payday advance; but some protection against an exploding, long term debt problem should be part of the equation.

News source: rapidcityjournal.com

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