Payday Lenders Suffer Rare Attack of Honesty

[TexasTowelie]

It may seem axiomatic, but it’s rarely stated out loud: Businesses that rely on poor people need the economic system to keep churning out poor people to survive. You almost have to applaud the payday lending industry for finally making this explicit in Arizona.

A proposed constitutional amendment that looks likely to hit the ballot there next year would limit future increases to the minimum wage, may claw back scheduled increases already set to take effect, and eliminate a week of paid sick leave. One of the payday lending industry’s leading trade associations has bankrolled the measure, making plain the connection between a lack of income and the spread of predatory financial services. “It’s pretty incredible,” says Rodd McLeod, who works with Arizonans for Fair Lending, which is fighting the proposed ballot measure. “We need people to be poor in order to continue to make money.”

The ballot measure is actually a response to consumer advocates’ effort to eliminate high-dollar loans in Arizona. In 2008, the state soundly rejected payday lending; as an industry-backed ballot measure, Proposition 200, would have allowed those types of low-dollar, short-term, easy-to-roll-over loans, and it was defeated by a 60-40 popular vote. But payday lenders found an outlet nonetheless: About half of them switched their business model to auto title loans. These are similarly low-dollar loans that use as collateral a borrower’s car title. Typically, these loans run for two-to-four weeks, and the annual percentage rate (APR) can be as high as 204 percent in Arizona.

According to figures from Arizonans for Fair Lending, one in three state borrowers end up extending their auto title loan, creating a cycle of debt. One in five wind up having their vehicle repossessed. Title loan borrowers spend $254 million per year in interest, an analysis from the Center for Responsible Lending found.

Read more: https://prospect.org/power/payday-lenders-suffer-rare-attack-of-honesty/
(American Prospect)

[CrispyQ]

1. This is just evil. And mean.

[ChazInAz]

2. And pure Arizona.

We're only a right to work state because the plutocrats convinced enough citizens to approve the idea after WWII.
As Jack Kerouac put it: "Tucson's a rich man's whore, bo!"