Payday Loan Industry Defends Itself

by jhwygirl

Frequent commenter problembear wrote a piece detailing his (or her) experience in ‘experiencing’ the payday loan industry. It was good. It illustrated the desperate situation many people are in when they go there and the lack of understanding some people have in obtaining the loans.

He laid out the math on these loans, having sat in the offices and read the fine print. These guys are criminals. Or should be.

The payday loan industry is loathsome. The ’07 legislature attempted to cap the fees and interest, but the guys that run 5 or 6 of these so called businesses here in Missoula – I call them nothing more than glorified loan sharks that work in buildings instead of back alleys and use courts to do their collection instead of baseball bats – went crying to the finance committee that “they’d have to close shop” and other pathetic excuses that should have been received with a “so what”, but instead the whiny legislature went running and closed up the legislation in an attempt to stay “pro business.”

Many states regulate that crap. Nope, not Montana – gotta stay “pro business,” regardless of the business. Hell with the citizens, it’s all about a handful of ‘business’ owners bank accounts.


Anyways, shockingly, there’s a commenter to the post, named “paydaylendingrep” (who links to who defends this loathsome industry.


problembear? Your brave to deal with such scum. God Bless Ya…..

  1. thanks for bringing your candle to help me scurry the roaches back into their hiding places jhwygirl. I tried to brush away the cobwebs off at 360 to get someone’s attention regarding pay day loans, but there doesn’t appear to be anyone home over at the miserablian. I welcome all to light a candle at our wick. Hopefully in the 09 legislature we can finally drive these cockroaches back under the crypt of the dead elephant where they belong.

  2. goof houlihan

    It was conservatives that created the rules that limited casinos in Bozeman. I wouldn’t be so quick to disparage elephants if you want to get this done in the legislature.

  3. there are many good people who espouse conservative viewpoints and we will need them all. point well taken goof. how about talking to a few good legislators on your side of the aisle and I will do the same?

  4. goof houlihan

    definitely. I wrote a long post, then didn’t post it.

    I remember the Pachyderm club in Bozeman giving David Ewer a warm reception when he led an effort to get rid of video poker.

    There really are some boundaries…”pro business” doesn’t mean supporting the local meth cooker!

  5. I hope everyone keeps the behavior of these guys in mind when they go to vote in Larry Anderson and Kevin Blackler’s races. Both of these guys (and several times in Blackler’s perennial losing career) have had their campaign signs prominently displayed at Malfunction Junction by one of these outfits. I guess it shows the kind of support they attract.

    In mentioning the failed effort during the last session, it’s also important to note that a few Dems dropped the ball on this one. I still hold it against ’em today and hope that my friends and peers do as well. Some votes aren’t very forgivable.

  6. Thanks all of you. All points well-taken.

    I did take the failed effort in the legislature as one of those “oh, no, we can’t hurt business” reactions. It’s amazing how little it takes to cry wolf in the name of business to send legislators scurrying from legislation.

    Then again – they didn’t get much done last session (or, more specifically, in the regular session).

  7. paydaypundit

    Folks, payday lenders charge $15 to $20 per $100 borrowed…any of you who have ever bounced a check or paid a bill late should understand why a reasonable person would choose to use a payday loan to avoid those fees.

    So,yes, it makes sense to ban them…and take the option away from people. Aren’t people better off if they have MORE options when in a bind between paydays, not fewer.

  8. goof houlihan

    I may be the only person posting here who’s taken a short term loan like this. At one point in my life, broke, hungry, living in a friend’s furnace room, I did pawn my .257 Roberts Remington classic for beer and grocery money.

    I ate, got paid, redeemed the rifle, and moved on. Sure, I think people need options. The libertarian in me understands your point. However, let’s just reduce the argument to the absurd. Should we give people the option to…cook meth? Should we give people the option to…steal cars?

    Pragmatically, society limits options it considers abhorrent. Usury, for example.

    Is a loan for $100 where a person only gets $75 and has to pay back $100 in two weeks, “usury”? Is it loan sharking? Is it something we should prohibit?

    I don’t think saying “yes” takes away anyone’s chamber of commerce “pro-business” card.

  9. well put goof. as Ralph Waldo Emerson said: we know the truth when we see it.

  10. Okay, this is vastly more personal information than should ever be divulged online, but …

    Goof, you are not the only one who got caught by the Usury merchants. I left Missoula with an A+ credit rating. When I moved back to Bozeman, I was unemployed for a spell before finding work. My savings was used up. Even drawing a paycheck, I could barely make the bills every month (and some months didn’t.) But we struggled through, until I got hit with an unexpected court ordered payment from a bill that was supposed to be the ex-wife’s (can’t fight that if you can’t afford a lawyer.) So I went to the payday lenders and borrowed a hundred bucks.

    I was hooked at that point, not because I wanted to be. It should be obvious that if you borrow $100, you’ll have $100 less the next month to pay the bills. I knew that, but didn’t feel that any choice was left me. So next month came around, and I borrowed 100 bucks. This cycle went on for a while, and don’t kid yourselves that the Usury lenders don’t count on that very thing. They do. They want you hooked, and that’s how they make money. I had to (eventually) start borrowing more money (which the payday lenders also count on) just to make the bills I couldn’t make in the month they were due. I kept hoping that a tax return, a relative with money (which I have none of) would die … I hoped for anything that could get me out of that cycle. This crap threatened my marriage, my health and even my job, mostly because I had a monthly reminder that I was worth less than nothing.

    I work hard, and eventually that paid off. I got a promotion that got me out of that cycle of debt, and then another that got my feet underneath me. But it took a long time, and lot of effort, and most people don’t have the simple luck that I had then. Even still, I am working hard to repair my credit rating.

    I have been left with nothing but vile loathing for the loansharks. They prey on the weakest of people, knowing full well that once they get their teeth into you, they’ve every government support for never letting go, Don’t let some asshole tell you that they take “great risks” for their money. No, they don’t. The only danger they feared was absolution of debt through bankruptcy, and now they don’t even have to fear that (Thanks, Max). They charge unbelievable rates for credit because the government tells them that those willing to pay it aren’t worth any better treatment. It is a government underwritten scam, much like most of our politically motivated fiscal policy.

    I believe we need fiscal controls in this nation. The number one rule of banks is: Banks will NEVER lose money. They will charge you *beyond* usury rates for a bounced check, and user fees for farting in their lobbies. The loan sharks count on this, and plaintively whine ‘wouldn’t you rather lick our butts than that of a bank?” No. I’d rather not tongue anybody’s butt, thank you. But unless there is full credit reform, there will be no stop to the Usury lenders, and stopping them will only shift the Demon to those who really want to suck your soul. $35 a bounced check for a check written for $1.50? You bet. The usury lenders have a point that they will screw you gently compared to their big brothers, the banks.

    I hate the payday lenders, with a passion I cannot describe. But let’s not pretend that banning them will solve any problems (Thanks, Max … you dick.)

  11. goof houlihan

    Wulfgar! here I was thinkin the caliber and make of the rifle might’ve been too much info.

  12. What would you have done, Wulfgar, if you hadn’t been able to borrow the money from the payday lender?

  13. Ended up with a credit rating of 5? I honestly don’t know what I would have done. At the time, bankruptcy was a very viable option; not so much any more. But that doesn’t appear to be what you’re asking. The implication appears to be “what *should* you have done”. I honestly don’t know, but I’m open to suggestions.

  14. While these personal experiences are fascinating, they involve hard working able bodied adults who were capable of pulling themselves out of the jaws of the bottomless pit I would like to point out that these pay day lenders are targeting seniors and disabled americans by various nefarious schemes involving cooperating banks (see WSJ article cited above) stealing Social Security checks. what about supporting some form of state of Montana legislation which at least curbs this diabolical and indefensible practice?

  15. They target the military too, problembear. I remember that part of the testimony in the ’07 legislative committee hearings.

    Even a capping of the interest isn’t enough for these legitimized loan sharks – they continue their damage with fees of all sorts….and why am I even saying this – you know it – you saw it.

    Ugly cretins…and don’t ya’ love that website, all nice and clean and family-oriented? What a load of crap.

  16. I am getting lots of good feedback from people of all political persuasions who are outraged about pay day loan / vehicle title loan practices running amuck. But in view of the fact that the 09 legislature is still a long year away and thousands of Montanans are being victimized daily at great cost to our economy and further burdening every non-profit charity in the state when high gas prices and high food prices also assail us. are there any budding or wizzened entrepeneurs out there who would like to join this conversation and discuss how a non profit could perhaps “compete” with these slime merchants at their own game and drive them out of business the old fashioned american free enterprise way. I am no business bear but these pay day loan slime devils can’t be rocket scientists either. can’t we help people and make enough money to grow a fund that could be sustainable but keep interest rates low so people can get the help they need without Pay Day Loan places? if we drive them out of business at their own game it seems to me it’s a win win situation

  17. Wulfgar, that wasn’t a loaded question. I am just wondering else you might have done.

    Problembear, I just came back from a national conference at which a non-profit operated a check cashing/payday loan program. My evidence is only anecdotal and since it doesn’t fit with the predominant feeling in here, I really don’t think I’ll go into it.

  18. understandable geeguy what with i’m just spit ballin’ here. I must be channeling big ron trusting the free market to solve our problems with the diabolical slime devils but who knows what possibilities exist out there in the nethersphere….it seems when evil practices like this are allowed to flourish it diminishes us as a people and a is not a very good thing to show our kids how to behave in a civilized society. I care about the victims, yes but mostly I am outraged and embarrassed that my tax dollars support a government that would allow such practices to go unchecked.

  19. I’d like to hear of GeeGuy’s anecdotal non-profit check cashing/loan story….I’ve never heard of such a thing, but it sounds interesting.

    Those check cashing things seem to be an indicator of less ‘desirable’ facets in a community – despite the squeaky clean image they try and display. Once one comes in, they seem to spread up like knapweed.

    I hope you’ll reconsider, GeeGuy.

  20. goof houlihan

    I was a little surprised at the WSJ and problem bear’s report. First, the “elderly” in general are the wealthiest segment of our society. I’d be more inclined to bet on the young using these, as both Wulfgar! and I reported we did.

    And, I can’t help but think it’s got a close tie to…gambling. There, I said it, the giant unmentionable in the room. However, that’s not what problembear reported. So maybe I’m wrong.

  21. vices play a huge part in pay day loans. of course. cigarettes. gambling. alcohol. drugs…People of all ages also fall on hard times for perfectly innocent reasons as well.the point is not why people use them,
    the point is that our laws- the laws of montana currently support the right of pay day loan/vehicle title loan businesses to extract 676% interest on these loans. I don’t think we need to go into great debates to agree that is ridiculous, outrageous and embarrassing to even the most right wing conservative and I am finding outside the nethersphere that there is much reason to be optimistic about people coming together to agree about this.

  22. Has the right wing blogsphere blogged this? Ever?

  23. frankly i am astonished jhwygirl, that no one- liberal or conservative has offered even one sentence on the possibility of driving the most depraved of these lenders out of business by using the great free marketplace? are there no entrepenureurs out there who would like to discuss….

  24. problembear, do you really think the proprietors of these places are earning 600% on their money?

  25. what individual proprietor’s earn in each business is dependent on their business plan and how they conduct their business.In short, that is their business. I am more concerned with what the state currently legally allows these businesses to charge which is 25% of the loan amount every two weeks. that is obscene in comparison to most of the other states in the country. the industry average is 15%. which is bad enough.any fair minded person can see that montana’s laws regarding these places must be revised in the next legislature. some states have banned them completely due to the extreme excesses which have occurred.

  26. “any fair minded person”

    That’s enough for me.

  27. i have gone back to your site and have been impressed with your grasp of facts and like the way you present them, although may not agree with all or very many of them. i am sure you are a fair minded person. it is a shame that we cannot agree about the pay day loan/ vehicle title loan slime devils. i would just leave you with another thought from my grandfather:
    “there is a fine line between tough mindedness
    and mean spiritedness.” not everyone can feel the bump when they pass it.

  28. Payday advance compares favorably to many consumer alternatives, even when expressed as annual percentage rates for two-week terms: $100 payday advance with $15 fee is 391% APR.; $100 bounced check with $54.87 NSF/merchant fee is 1431% APR; $100 credit card balance with $37 late fee is 965% APR; a $100 utility bill with $46.16 late/reconnect fees is 1203% APR; a $100 off-shore Internet payday advance with $25 fee is 651.79% APR; $29 overdraft protection fee on $100 is 755%.

    Even if we look at the average bank fees, payday loans are often a less costly option: $100 payday advance= $15 fee; overdraft protection= $29 fee ; late fee on credit card bill= $37; bounced check and NSF/Merchant fee= $55.

    Consumers deserve to have choices and options. Don’t take away their choices by claiming to “protect them.”

  29. slime devils to the rescue! great- w’ere all saved. except you ignore the fact that montana allows 25% of the loan amount which is 650%. you guys are trap door spiders that that wait for the poor: seniors, disabled adults, military personnel, etc. who are lured in and try to climb out of your little funnels of hell and with each step they sink deeper so you can suck them dry. You engineer it that way. that is your business plan. the other costs you mention only happen once- your particular brand of misery which you inflict on the poor goes on and on and gets more and more expensive. you and the damned souls you represent only help themselves and cash in on the misery of others while actually proliferating more misery which nonprofits must clean up after by providing necessities to the dried out husks of sucked dry poor that you leave behind.

  30. fingerpuller

    On these issues, you have to choose between the Republican school of governmental minimalism or the flagrant Democratic regulation of businesses. You’re sitting on the fence here. People need to be left to make their own financial decisions, because if you start regulating payday lenders, where does it stop? Soon nobody can get a loan without perfect credit and a six figure salary. People need to be free to take a chance.

  31. fair-minded people of all political persuasion are on board with regulation of this industry. when the montana legislature convenes in 09. it’s as good as a done deal. and for anyone who needs further proof that regulation is needed (more than just the targeting of our seniors and disabled people) read this article- http// on how this plague of locusts targeted our military families before congress stepped in a year ago and passed a law to protect them. it caps these loans at 36% rather than the current rate of 650% allowed under montana state usury law. we need to provide protection for our seniors and disabled as well.

  32. goof houlihan

    I pick a little big brother on this one, then. And anyone who thinks Republicans are governmental minimalists just having been paying attention to the zeal with which they insert themselves into the private parts of a persons life, pun intended.

  33. thanks for helping me keep this topic front and center goof and fingerpuller. I do appreciate it.
    people need to become more aware of how pay day lenders target and victimise their clients. it is a whole year away to the state legislature and meanwhile we need to keep getting the word out about this serious drain on our already faltering economy. serious regulation of a runaway industry does not constitute big brother, goof. that is a stretch of imagination far too difficult for even you. not sure what you mean up there but have written a few fractured sentences myself. not conversant in blog language yet. still use the king’s english.

  34. goof houlihan

    Never been a big fan of the “you can’t draw a line because where do you stop?” argument. Why have speed limits? Why have laws?

    We “stop” where the natural laws innate in normal humans take us.

    So if I have to make a choice on regulation of usury, I choose “drawing a line” somewhere that doesn’t allow usurious interest rates.

  35. so if i can borrow your analogy if the pay day loan lenders own kenworths and the victims they target own scooters it would be perfectly alright to simply crush anyone who gets in their way because we don’t need any stop signs, or laws, or ? thanks for the image, goof, and once again i do appreciate you keeping this issue front and center.

  36. if anyone needs help with a payday loan problem or if you are just interested in what is being done nationally to end this scourge i just found a great website that was forwarded to me by a very helpful staff member of John Tester’s local office. it is
    this is a great organization working on all abusive lending practices in this country. I have called and e-mailed over 50 state legislators and so far 26 have expressed support-and most of them are republicans! Ohio just passed a law capping interest at 28%. Oregon copied the military law just passed this year with a cap of 36%. very good news and this train’s a rollin…thanks everyone for all the support. you will be hearing from me when the time gets closer.

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