I’ve been following efforts in the city of Springfield to limit the density of so-called “convenience loan” (payday loans, title loans, etc.) establishments because Peoria is trying to do the same thing here.
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The State Journal-Register reports:
The [Springfield city] council in a 5-4 vote killed the proposal that would have prohibited new payday and title lenders from setting up shop within 1,500 feet of existing ones. […] Aldermen who opposed the measure said they didn’t want to discourage business, especially in a slow economy, nor did they want to establish a precedent.
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“If someone comes next week and says, ‘I want the same thing for fast-food restaurants,’ how do we say ‘no?’” argued Ward 10 Ald. Tim Griffin. […]
Ward 1 Ald. Frank Edwards said he has heard from landlords who didn’t like the idea. “I’ve had business owners approach me and ask, ‘Who do we rent to?’” Edwards said.
Apparently Springfield has the same kind of problem with the establishments as we do here in Peoria. In the same way we have a large concentration of convenience loan places on University street between War Memorial and Forrest Hill, Springfield has a large concentration on their MacArthur Boulevard.
The reaction to the decision in the comments section of the SJ-R’s website is revealing. Here are a couple of comments that caught my eye, pro and con (spelling errors in original quotes):
I hate those payday load places… however, I agree with the results of the cities vote. Its a dark road to go down once you start restricting personal businesses. We dont need that!!
If the payday lenders were forced to be equally distributed throughout the county, they might wind up in such places as Leland Grove or West White Oaks Drive. No, City Council likes them right where they are, clustered tightly around the borders of poorer neighborhoods.
I, of course, also hate convenience loan places because I believe they’re loan sharks that prey on the poor and vulnerable. But the Springfield council’s action and some of the comments have got me wondering if the city’s attempt to regulate their zoning is really the best solution. In other words, I agree with the ends, but I’m not convinced this is the best means.
Maybe it would be better to work on getting state legislation passed that would regulate these loan places, the same way banks and credit unions are regulated.
What do you think is the best solution to the problem?
The best solution is to leave them alone and set up non-profit financial counseling centers next door to them to teach people how to manage their money.
If you stop new ones from opening it only give the existing ones a monopoly and if you over-regulate them then people who are using them will just go bankrupt.
Better to find a way to help the people and then they’ll naturally go out of business when their market dries up.
Best solution? Restore usary laws. Usary laws used to govern the interest rates and terms that could be used in issuing credit. Years ago, the credit card industry successfully lobbied to have these laws repealed (ie deregulated). This has allowed for all sorts of credit card mischief and allowed other credit sources like payday loans to thrive.
http://www.pbs.org/wgbh/pages/frontline/shows/credit/
I would much rather see an introduction of micro credit which exists in Mexico, India and some other places. A Nobel prize was awarded to the creator of micro credit, Muhammad Yunus. Micro credit is far less predatory. ref: Grameen Bank
They are no worse than credit card companies that lure unsuspecting and uniformed people into debt. It’s the economy and the times we live in. These places would not survive if people had meaningful jobs. (meaningful means working wages that buy homes, cars, ice boxes etc etc) Maybe if we get a good Democrat in office, 🙂 the economy will turn around and these places will go out of business. Otherwise, restrict them not.
The credit card and loan industry has no better friend in government than a Mr.Joe Biden. Look up his record. Restrict them not he will. No matter the econ.
What I love about Payday loans is that they are meant to be short term and can help in a tight situation if you are running a little short on cash during the month.
You are right Payday
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