# Hot Blava

The national debate will always seep over into local politics and thus, events on the national stage will find their way into Hot Blava. We hope that Hot Blava will be an interesting mixture of national issues and issues that affect Utah, and particularly Utah County where we live. Mostly, it is great to write about issues you're thinking about as it solidifies your thinking... or exposes your own irrationality. You can decide which is which.

## Sunday, November 13, 2005

### Utah Loan Sharks: Payday Loans

The Deseret News printed an important piece today.
"Utah has more payday loan stores than 7-Elevens, McDonalds, Burger Kings and Subway stores -- combined."

> It found the median quote was $20, or 521 percent annual interest. Rates ranged from a low of 312 percent annual interest to a high of 913 percent, or $12 to $35 on a two-week $100 loan.
> "Studies on interest rates charged by the Mafia in New York City in the 1960s found an average rate of 250 percent. So, payday lenders in Utah charge more than twice as much as the Mafia loan syndicates. It shows it has gotten out of hand," said Christopher Peterson.

I was super disappointed to hear Frank Pignanelli quoted for the defense in this article. I guess he's acting in his role as lobbyist rather than human.

> Lenders disagree with critics. Frank Pignanelli, attorney and lobbyist for the industry's Utah Consumer Lending Association (and also a political columnist for the Deseret Morning News), says, "Payday lenders fill an important niche. Try walking into a bank or credit union and say you have withdrawn all your savings and maxed-out your credit card but want to borrow $300 for two weeks. They will send you to a payday lender."
> He added, "People compute and figure it is cheaper to get a payday loan than to pay fees for a bounced check, or have a late utility payment, or fees for a late mortgage payment. That's why they proliferate here."

I can see the niche that such lending could fill. Here are two more paragraphs from the article that should explode that notion, comparing a study by the payday loans and one from an outside organization.

> [Pignanelli] says industry studies say a typical borrower in Utah is a woman in her early 30s with a household income of $50,000 to $70,000 and is "using payday loans because she doesn't want to pay overdraft or retail merchant fees." He says lenders "don't prey on the poor and the homeless because the poor and the homeless don't pay back loans."
> Of note, a 2003 study by the Center for Responsible Lending said it found that 91 percent of all payday loans are made to borrowers who take out five or more such loans a year. It said only 1 percent of all payday loans are made to one-time emergency borrowers.

I think Utah, in the spirit of human decency and responsible government, ought to put some huge restraints on this industry and stop (or drastically reduce) this leaching off the poorest among us.

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