Good for Sunflower Community Action for planning to protest today against payday lenders that prey on the poor and uninformed. These businesses have mushroomed during the past year, and so have their TV advertisements, which show smiling people getting what seems to be free cash. What these commercials don’t disclose, of course, is that the effective annual borrowing rate on these loans can be 400 percent. Lawmakers need to take action to limit these rates and fees. In the meantime, Sunflower is doing an important service by warning citizens not to get duped.
Posted by Phillip Brownlee
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73 Comments
Just as I see them pop up, I see them go down. It’s a fad business model, plus it’s cheap to get started and operate, making it a an easy business for people to get into. Most will fail to do any business at all.
The Payday Loans have always been around, but the mushroom of them that popped up will pop back down. It will just be a matter of time. No need to pass legislation on them. Tighter regulations, maybe, but let them fail on their own, not with overbearing force by the government.
Evil money changers!!Christians should get this banned.
Payday loans are a bad financial choice. However they do not force anyone to do business with them. It is a consensual choice between adults and the government should stay out.
Proudman, you make them sound like hookers.
Maybe we should legalize prostitution. Believe it or not, I heard Brenda Landwehr say that on her debate with Dee Stuart on PBS.
She said it would bring in a lot more money to the state and bring a lot more tourist than a destination casino. She may be right about that.
Honestly! If it were regulated, taxed, and public health monitored, I wouldn’t see a problem in it.
Joe–With that reasoning we should also have the gov’t get into the pot business.Regulate it, package it, sell it at the liqour store. Tax the hell out of it. Fund education with it.Oh, it would also be an excellent crop for bio-fuels.Damned American!!Smoke a doob for Old Glory!!
Good morning Joe.How’s the coffee?Mine’s good.Cain’s restaraunt blend.
If the economy is so great, why would there be a need for this type of business?
The payday loans business remind me of the appliance rental type businesses, prey on the poor and economically disadvantaged.
Prey on the poor victims? And, just who is dragging these “victims” into the stores?
The appliance rental businesses (and payday loans) fill a need for people who cannot (for whatever reason) buy something from Sears. (of course, Sears has a 24% interest rate as well).
So, if Sunflower group is successful at driving these “predatory” businesses out, are THEY going to loan money to people who are broke?
Once again..people are meddling in others’s lives. Sunflower and Southwind are watching out for us. There is no need to exercise any judgment of our own at all.
Here is a thought. If you don’t like the payday loan companies, DON’T GO THERE! Simple.
Deb Gruver had some articles in the Eagle covering this topic this past week. I think an important part of dealing with the problems these predatory lenders create, is to encourage the traditional lenders (Credit Unions and Banks) to offer more to people who have less than stellar credit. Sunflower has been doing this and report progress with Capitol Federal using non-traditional credit references to decide about loans. If more traditional lenders can put together products for the customers who have utilized payday loans – many of these 400% APR lenders will be out of business in no time.
One of the reasons there are so many of these businesses in Wichita (over 60 last I heard) is that the legislature wrote into the law that allowed payday loan places the ability to charge 400% APR, the additional requirement that one can only have 2 loans with a given payday lender. I think the idea was to stop people from getting over-burdened with this debt. But this well-meaning restriction created the condition so that people go to various payday lenders, take out loans with multiple companies and before long are in serious trouble.
Raptor is right the fringe economy exists for a reason and to completely shut it down may harm some of the people in that economy.
I think progress is being made and I am encouraged by it.
I also think Deb Gruver deserves credit for her persistence in reporting on this issue. Thank you Ms. Gruver.
Must the government always protect people from their own stupidity?
Viva La Raza Blanco!!!
These “buisinesses” are no more than loan sharks with a storefront. I cannot imagine any person of decency doing this. Truly the worst of capitalism…..soak the poor. Oh they don’t break your leg if you cannot repay their extortionist interest. They just take your car! Shut ‘em down!
JR,
Nobody is holding guns to the heads of these people and forcing them to use these services.
V.L.R.B!!!
I have never and would never patronize these places. I’d rather rob THEM then have them rob me.
Ian? Perhaps you are not yet a victim of this economy. Folks are hurting and need money just to eat. No no one is holding a gun to their heads but neither should this exploitation of their misery be allowed. 400% interest is not illegal. But it is wrong.
Thousands of people declare bankruptcy because they could not control their installment debt. Let’s ban all installment debt.
Millions of people are addicted to alcohol. Let’s make it illegal for everyone.
Millions of people have problems gambling, let us ban all forms of gambling.
Smoking kills. Let us make smoking illegal.
Tens of thousands of people are killed/injured in car accidents. Let us prohibit private ownership of vehicles.
Some people cannot pay their mortgages. Let’s ban private home ownership.
Little ridiculous, don’t you think? Yes, some people get in over their heads. This is a reason to ban one type of lender? Is it our government’s responsibility to protect us from ourselves in all cases?
What ever happened to personal responibility? Whatever happened to adult choice? Do we really want a NANNY government?
People do stupid things when they get deperate, then you have the poor people that are just not smart enough to handle what little money they have. Predatory lending should be outlawed. Just because you can take advantage of someone, doesn’t mean you should be allowed to.You’re some kind of Christian, Ian. Bet you’d sell your mom for the right price.
JR,
I have contempt for the bottom feeders as well. However, where do draw the line when it comes to government intervention? The evil credit card companies charge almost usurious interest rates yet most people foolishly run up huge balances and make minimum payments.
Obesity is epidemic because people make bad choices but I wouldn’t want the government to shut down McDonalds and KFC.
V.L.R.B!!
I really don’t like these businesses and anyone who profits from one is a jerk, if you ask me. One such jerk was a big official in the Clinton administration: William “Billy Webster IV – CEO of Advance America.
Despite my loathing of the people who run these businesses, I am convinced the way to effectively counter them is to encourage banks (not thru tax paid programs) to offer more for fringe economy customers. There is money to be made — many of the fringe economy customers are actually more middle class than poor.
Sunflower has been encouraging traditional banking/credit union institutions to provide products for the payday lender customers and they are making progress on this. The foregoing makes me wonder about the benefit of, and reason for, this march/protest. Economic competition has to be a much more effective alternative than protesting.
Damoon,
I despise some of the excesses of capitalism but I have always conducted my self and my business with honor and integrity, thanks.
V.L.R.B!!!
Maybe you should try to have a little more compassion for people who don’t have an IQ as high as yours. You claim to be a Christian, are you?
Damoon,
I am an SSPX Catholic and fairly devout, does that make me a Christian?
As to the matter at hand, I made the point about fast food outlets. Would you have the government close them down. the biggest taxes on the poor are lotteries and casinos; would you see the “government” shut down them?
I could go on but my point remains that the government can’t and should not ry to SAVE people from their bad life choices.
V.L.R.B!!
What seems to be missing here is “personal responsibility”. Why not protest the stupidity of the people using Payday Loans?.”Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.”- Albert Einstein (1879-1955)
I believe that anyone who can not handle their finances to the point that they default at a payday loan type business should have a guardian appointed to take care of them..Sunflower Community could be a focal point to provide the guardians for them.
Okay, Raptor.
Legalize all drugs. If you don’t want drugs, don’t use them.
Prostitution? Legalize it. If you don’t want to pay for sex, you don’t have to.
Child pornography? Hey, who are we to say what’s right and wrong for others? Don’t look at it if you don’t like it.
*****
See the problem with your idiotic oversimplification? People don’t live on an island–we all live together.
Somebody ruining their life has an impact on all our lives–their children are going to be less likely to succeed and more likely to be put in prison. And who PAYS for prison, Raptor? You do and I do.
You conservatives refuse to acknowledge that predatory business practices don’t just hurt the immediate victims, they radiate out to a lower quality of life for everybody else too.
You have it wrong Right Angle. Personal Responsibility doesn’t mean that someone else has to come in and pick up the pieces. All you are saying is that they need someone to take care of them because they can’t do it. That is no different than the left-wing position.
Typical liberal do-gooders. These pawn shop operators never could have paid (despite their so-called exhorbitant fees) for the amount of press coverage they got last night. People across the city will be saying, you mean I can get money THAT easily? I’m sure their offices will be jammed on Monday.Typical. Liberal. Idiots.
I used to take care of a family where all the members were cognitively very low functioning or menatlly retarded. They were constantly being taken advantage of. They paid $40 dollars a month “rent” for a computer they had no idea how to use. They took out a second mortgage on their house (at 18%) to buy new doors ($700 each) and new windows, none of which they needed. They did all sorts of things to there house that wasn’t neccessary because they didn’t have the abiltity to say no to anyone that pressured them. All this from companies that sent people door to door looking for vulnerable and elderly people who could be talked into anything. My hands were tied to help them, because it was all legal.Sometimes vulnerable people need to be protected, because there is always someone out there who will take advatntage of anyone in order to make a buck.
JoeBlow–
What is idiotic is to save a few pennies on school nutrition and education and, yes, welfare to needy families, and then spend 30,000 dollars a year to incarcerate some poor bastard because he was so desperate he resorted to holding up a Quick Trip.
Crime is a function of options. For a lot of people, it’s what they see as their best option.
If you believe in results, not ideology, then you want what works.
Interesting. Crime is just another lifestyle choice, is it?
Of course, if public schools actually taught children what they needed to function in the world, graduates of public schools wouldn’t be so desperate as to resort to crime.
No, anon, you completely missed the point. It’s conservatives who think that crime is a choice. Most criminals make the decision to turn to crime out of desperation.
Making an honest living is a lot easier than street crime.
I remember when I was doing mediation in Court running into some defendants who were hopelessly in debt to Pawn shops. What really struck me was the combination of predator and ignorant prey. I think Sunflower Community Action needs to do is two-fold: (1) educate people as to just what they are getting into with this type of borrowing and (2) open up alternative avenues for small short-term loans.
I recall a guy in Bangladesh who started a bank doing “micro-loans” so people could get the very small amounts they needed to buy a chicken or whatever to get off the ground. He said that these were the borrowers ignored by the ’system’ but that they were also the ones who would ’seed’ a village into a ‘bootstrap’ economy. He has been doing this for years now and has a default rate much lower then conventional lenders.
I suspect that if a Community-based institution started a combination counseling/lending practice (and screened their clients) they might see the same. I submit that such an approach would be more effective than protest.
“I recall a guy in Bangladesh who started a bank doing “micro-loans” so people could get the very small amounts they needed to buy a chicken or whatever to get off the ground. He said that these were the borrowers ignored by the ’system’ but that they were also the ones who would ’seed’ a village into a ‘bootstrap’ economy. He has been doing this for years now and has a default rate much lower then conventional lenders.”
Hillary and Bill Clinton went to visit that guy and were interested in getting something similar started in the U.S., but it never has caught on really.
Exorbinant APRs do not have to exist. The maximum allowable APR are decided by each state. Our legislature voted in the 400% APR figure. In Montana the legal top APR rate for a payday loan is 800%. In Wyoming it is over 700%.
I have often wondered what our legislature was told would be the advantage of allowing 400% APR here in Kansas.
Right, DD.
I remember when 20 percent was considered “usuary” and was illegal.
Now, that’s routine for credit cards.
And isn’t it interesting how the radical religious right hold homosexuals to the letter of the Biblical law but completely IGNORE all the Old and New Testament bans on loaning money at interest?
Good point, TrueBlue. Too many Christians only pay attention to the scriptures that don’t require any sacrifice on their part. Besides, it’s too finacially lucrative for the lenders, and it’s the lenders that have all the clout.
“I recall a guy in Bangladesh who started a bank doing “micro-loans” so people could get the very small amounts they needed to buy a chicken or whatever to get off the ground.”
Actually, it has been done in many locations around THIS country, most notably in the south shore project in chicago. Austin had a similar program. The most successful of these “micro loan” (sba term) programs here tend to be peer based.
They are good programs, but guess what? Traditional lenders dont like them for obvious reasons, and local economic development groups dont like them either because they are “little” scores, not like the big dollar, big business projects that keep their public budgets funded.
SBA paid lip service to these programs a few years ago, but, big surprise, under the leadership of bushco, they have not been promoted very well, despite their success.
It amazes me how quickly any topic on the WE Blog seems to lead to some kind of Christian bashing…If I see it.. I’m calling you on it… TrueBlue and Damoon… what on earth does this story have to do with Christians?
The hyprocrisy is that Christians are so ready to fight against gay rights because of what the Bible says about homosexuality, but the Bible clearly states that it is wrong to lend money with interest, and the Christian leadership gives little if any attention to that. What is more harmful to our society? Two gay people in a committed relationship or poor people being taken advantage of by all these predatory lenders? Where is the Christian outrage over Payday Loans?
If anyone espouses views that are anti-gun/anti-Christian and/or anti-White then they will have an uber cheerleader in DaMOOON. :)
Viva La Raza Blanco!!!
Ian–
Shouldn’t it be “viva la raza blancA” so that the adj and the noun agrees?
Damoon–while the right-wing fundies claim they don’t pick and choose among which Bible passages are truer than others, you have rightly pointed out how they totally pick and choose.
Consider divorce–”anyone who divorces his wife and marries another, commits adultery.”
The most ignored injunction among fundie churches on Sunday morning . . .
Damoon…Well… if it helps… I am outraged by predatory lending.. I’m not sure when the usury laws went away, but I always thought it was illegal. I thought you people wanted the church to stay OUT of civil matters…. now you want them to address civil matters….. which is it?
BTW.. the lending without interest was an Old Testament law that only applied to one Jew lending to another.
TB…Adultery is a sin… ALL Christians are sinners.. they are just forgiven. That doesn’t make adultery right!
A few months ago, I was talking to a Muslim acquaintance, who was telling me about institutions they’ve set up that lend money to Muslims at no interest, allowing them to buy cars and houses, and still follow the Quran’s injunctions against borrowing or lending money at interest. I don’t really understand how these institutions function, but it might be worthwhile to find out, and maybe set up a few of our own!
Jed…I’m sure a few of our wealthier mega-churches could do the same thing if they would choose to. I do know of instances where individuals have loaned others money interest free. Wish I could afford to do that…..
Sam,I’m sure they could, but without being coercive? It might be better if they contributed to a non-sectarian fund that would be open to poor people of any faith.
Interesting idea jed and damoon. I happen to be a capitalist (as is that guy in Bangladesh) so I would tend to go with a reasonable interest rate charge. However, I also understand that there are some Scriptural proscriptions in that regard; thus the old Middle-ages prohibition and the current Muslim situation. Perhaps a variety of solutions including faith-based and secular.
Kassam–Homosexuality should be treated the same?
“BTW.. the lending without interest was an Old Testament law that only applied to one Jew lending to another.”
Why was it illegal in Europe until the 18th century?
Jed…Does the Muslim fund you spoke of lend money to non-Muslims?The Christian churches are more apt to help the poor through free food, clothes, etc… Our Christian group also provides help with rent, or even bus tickets on occasion. You might be surprised that we do not require the recipients to be Christians.
So why no constitutional amendment against adultry? Or divorce?
Still no answer from the religious experts like nathan.
Sam, I know you do not approve of the federal hate amendment. But maybe you can help us understand why evangelicals think SOME sins require the constitution to be amended, and some sins dont.
Blue – I think there was a New testament proscription somewhere as well. I think a lot depends on one’s definition of ‘usery’ – either being ANY interest or exorbitant interest.
sam – I think their lending is just within their community.
I think some of the ideas above would go a long way toward solving the predatory lending issue. Charge a reasonable rate, teach some budgeting and responsibility, counseling, etc. Combine both secular and faith community segments.
TB…”Kassam–Homosexuality should be treated the same?”
I don’t know what you are referring to. The same as what?
“Why was it illegal in Europe until the 18th century?”
I have no idea…. I just know the Old Testament Law was for Jews, so I guess the Europeans must have adopted that portion of it….?
Sam – I’m fairly sure there is also a New testament proscription of some sort. In fact, in Europe all the bankers were Jews since they could charge interest to Gentiles. (see The Merchant of Venice)
I also think there is no understanding here of why pointing out the inherent contradictions and hypocricy in christianity is important.
So many christians, dominionists, christianists, whatever term ya wanna use, INSIST that their religion be the law of the land. Hence the taliban references. They do this because, like nathan, they believe ONLY their interpretation of god’s word is accurate. They claim the moral high ground.
Hrumph.
If they own that moral highground, and they insist on using their bible to make secular law, then the contradictions between their lives, their beliefs, and their literal interpretations of “god’s word” are fair game in the public discourse.
Withdraw religion, ALL religion from the secular domain, and I will let up on pointing out the obvious about religions and oh so many pious people. Until then….
Yeah, what does the bible say about lending money? And why no constitutional amendment regarding THAT?
KFG..I’m going out on a limb here, but I would say it is fear.I do NOT believe that homosexuality is only a choice, I can see it in nature and there appear to be genetic traits associated with it. Those who do not believe that, FEAR that if it is allowed in the mainstream that they might be tempted… just as they are with adultery, etc. Their faith is too weak to lean on God, so they choose to insult God by pursuing man’s help.
That being said… I know alot of good Christian people, and they have been deceived. The word “marriage” is kind of a sacred bond they wanted to protect. (yeah, I know the divorce rate). It should have been an issue dealt with inside the churches. I truly don’t believe that most wanted the leadership to go out and try to ban gay relationships or civil unions. I can only speak for those I know… but many that voted for the amendment first time would not do it again. I know the damage is done… but we will continue to work to make it right. I can only ask in the words of Jesus.. forgive them, for they know not what they do, and then help us to educate them so they understand.
” but we will continue to work to make it right.”
How is this being done sam? What are the churches doing to undo the damage?
Sam,As I understand it, the funds were set up specifically to deal with the problems of Muslims living in a credit-based society, who wanted such necessities as housing and cars and such, but were prohibited from paying (or charging) interest, so I don’t think they lend outside the Muslim community.Coming from you, I’m not at all surprised that you don’t require your recipients to be Christian, but I’ve seen groups that use their aid to coerce, and I’m sure you have too. I took a friend to one of the local church foodbanks a while back- he couldn’t work because of frequent and severe panic attacks- and the people there insisted, over his protests, on a laying on of hands. Turned out he didn’t need the groceries after all, since he was hospitalized for several weeks following their “treatment!”One group I have a great deal of respect for, and who might have the talent on tap to pull off such a lending project, is Interfaith Ministries. Maybe we should try selling them on setting up such a fund.
Ben..You are probably right, but I don’t recall where to even look for it.
KFG…I, like Nathan, believe that the bible is the inerrant (sp?) Word of God. I also believe that as a man, I am incapable of perfect understanding.
KFG…The churches aren’t doing much..The rest of us are too small to move them quickly… but if God is with us, who can be against us? It will have to be a grass roots, bottom up movement.
Jed…That is a good organization.. it would take alot of work and deep pockets to pull it off.
“if God is with us, who can be against us?”
I cant believe you would even say that to me. But I know you probably meant well.
I agree with you about humans being incapable of infallible interpretation of “god’s” word.
My point exactly about using that flawed interpretation to RULE over others.
Can you help us understand why one “sin” requires a constitutional amendment, but divorce and adultry dont?
Jed – I agree on Interfaith – would also add Catholic Charities and United Methodist.
I make a strong differentiation between “Christian” (I’m married to one) and “ChristIST”. The latter is the one who wants to create Eccliastic Law. Sort of like the difference between Islam and IslamIST.
Farm Gal, Sam,This state marriage amendment reminds me a lot of the amendments that were hurriedly passed in a number of southern states back in the ’60’s to insure “Segregation today, segregation tomorrow, segregation forever.”Of course, the federal courts held them unconstitutional, as I’m sure they will these in time. ‘Fraid the RR is on the wrong side of history on this issue, as well as several others!
Sam, Ben,Yes, such a project is going to require some deep pockets. Maybe this would be an opportunity for Interfaith, United Methodist and Catholic Charities to get eccumenical and pool resources. Might look for some funding from the business community too, since this would be increasing buying power for poor people. What we need are some skilled cat-herders to get everybody going in the same direction! Any volunteers?
If I may ask, what would be typical purposes for these small loans?
KCL,Well, groceries are useful, but often it takes money to provide the infrastrucure needed to break out of a poverty cycle. Something as simple as a week’s worth of decent clothing so they can give a decent impression to an employer might be a possibility, or maybe the set of tools required for a job, or to buy a computer for a kid who needs one for school, or pay for job training, or any of a number of other purposes. Eventually, maybe setting up small businesses that would provide employment for poor people. The needs are huge, so the possibilities for such a fund are as vast as the fund is!
Sam, I respect you because you try to live Christian values with humility and without judging others. I know you are sincere and you have a gift for expressing your opinion or making a point without putting anyone down.
I’d still like to see how the fundamentalist Christian leaders explain working to pass an amendment against gay marriage but not against divorce or adultry. Of the three “sins”, which is the least distructive to family values?
KFG…well.. if we are doing work pleasing to God, like setting his people free from persecution or bondage.. then God will be with us! The great reformations in the church were brought about by those who disagreed with policy/doctrine. Yes.. that could be me.. or YOU! The time may be near….
Damoon…Easy… they don’t bring it up… I’m not even sure they thought about the comparison. Yes, you and I think it is wrong because we see the discrimination and the affect it has on real people. Those in ivory towers tend to be shielded from those things that don’t affect them personally! And just maybe the divorce/adultery issues MIGHT affect them personally!
Sam, Da,Actually, they have brought up divorce, in that at least several of them have talked about doing away with so-called no-fault divorce. In other words, if a woman is abused or cheated on, she must present proof acceptable to the court before being granted a divorce. This is how it was back in the 1930’s, when women were expected to put up with abuse!
Jed..My plate is pretty full with my own ministries, but I would be happy to support and advise. (not that I know anything). I did see on TV that there is a meeting on the subject coming up at one of the Baptist churches. I didn’t really catch the time or place… anyone know?
Sam,I saw it too, but since I’m going out of town for the weekend, I didn’t note time and place. The group sponsoring it is Sunflower Community Action, and it’s Saturday morning at one of the Methodist churches, I believe.