Politics Payday Loans
posted by December 29 at 12:15 PMon
Newbie Stranger news writer Angela Valdez has a story this week on the latest PR move by Renton-based payday loans company MoneyTree. The new PR strategy? Hire a prominent black political consultant, George Griffin, to help spin. (The payday industry, obviously, is under attack from minority activists and politicians who claim payday loans target poor blacks and Hispanics.)
I was out with my friend Marco last night, and he had an honorable liberal idea about dealing with the necessity of payday loans. He thought local government should take over the industry by contracting out with a local bank to give loans—using city credit to underwrite the loan. His impulse was similar to the notion that government should legalize prostitution and drugs and manage those industries.
His thinking (I had had 3 whiskeys by then) went something like this: Banks obviously, don’t give loans for rent and groceries. And certainly don’t give loans like that to low-income people with shaky credit. But people do need to borrow money in those situations. Which is why MoneyTree is thriving with its 400% APR. The city could cap the interest rate at something reasonable, 10%, have eligibility requirements (requirements that would cater to low-income people with credit problems and prevent those who weren’t really in need from tapping the program), and simultaneously connect the borrowers with social service programs (like money management classes) that may suss out or address the root cause of the borrower’s desperate situation.
Obviously, co-opting the industry like this doesn’t hit the deeper inequities of racism and capitalism (this is what I said on three whiskeys, anyway), but it is a way to stop the harsh usury, provide for people in need, and perhaps help them in the long term.