Politics State Rep Questions Poor People’s “Intelligence”
posted by January 30 at 12:48 PMon
Earlier this year, a group of consumer advocates started pushing a bill in Olympia that would cap payday-loan interest rates at 36 percent. It’s HB 1020. Now Representative Steve Kirby (D-29) is pushing an alternative. It’s HB 1817. This option would set up a 60-day payment plan, allowing consumers to pay back the loan in four installments. The payment plan would only be available once a year. The bill doesn’t address the high interest rates associated with payday loans—nearly 400 percent APR—or allegations that the businesses target the poor and minorities. Aaron Toso, of the Statewide Poverty Action Network, says the bill resembles a similar payment plan already in place and does very little to protect consumers.
In essence, the bill is designed to keep payday lenders in business. Critics think it pays only lip service to the call for reform.
I talked with Kirby on the phone yesterday. I said that the bill doesn’t appear to do much to prevent people from taking out multiple loans, which, compounded, leads to the astronomical interest rates. I asked him what safeguards there are in place to stop people from re-entering the cycle of debt. His answer: “Um, intelligence? What prevents me from walking out in front of the bus?” He says the one-time payment plan option should be enough. “If you went to one of these places and found out you screwed up…. You have an opportunity to jump off this thing.” Kirby, whose committee would be the first to consider any regulation of the industry, says he never planned on considering the cap.
Also from Toso, people associated with the local payday lender MoneyTree (its employees, its owners, and its lobbyists) have made more than $300,000 in political contributions since 2000.
And my own two cents: Yes, poor people make stupid financial decisions. For more on this phenomenon, read Adrian Nicole LeBlanc’s brilliant, Random Family. The thing is, when we make it easier for the underclass to behave unwisely, we create a problem for society as a whole, not to mention the unwitting children of the poor.