| The Boulder Daily Camera isn't a news outlet you'd expect to have a particularly conservative editorial board, and through writer Erika Stutzman they generally deliver an editorial view consistent with the liberal Boulder residents they serve.
Now Boulder is a pretty unique place, of course, and while self-described as 'progressive' Boulder has some of the highest costs of living, as well as chronic shortages of affordable housing, anywhere outside of the ski resort towns in Colorado. There's an argument to be made that many of the social and economic problems experienced elsewhere in Colorado are not really absent from Boulder, just exported to less expensive places where many of the city's workers actually live.
And we're willing to guess there are fewer payday loan shops per capita in Boulder, too. Which brings us to today's Daily Camera editorial and its fascinatingly lobbyist-consistent talking points:
Payday lending has a seamy reputation with some, so we hope voters will not be fooled: This is a terrible bill.
The fees on payday loans are certainly high when compared to annual interest rates. But they are not longterm loans. They are limited to $500, and due on the customer's next payday -- typically in two weeks. If you took out the full $500, you would pay a maximum of $75 for the privilege of using money you haven't earned yet.
They are, essentially, emergency funds for people with steady jobs who haven't yet earned the money they need. Who are these people? Well, employed folks, for one. No paycheck, no loan. More than half attended college; and the average household income is $55,000 a year...
Now this is important: Bill proponents say that most Colorado borrowers are using the payday loans more than once a month.
It's not true. Let's kill that rumor now: According to the attorney general's office, 303,462 took out payday loans in 2008. Only 5.8 percent of them took out 13 or more loans of up to $500. Compare that to the number of people who carry a balance on credit cards without a $500 cap. The Federal Reserve says it's 58 percent of the card-carrying U.S. households. Seventy-five U.S. households have credit cards.
And 72 percent of all Colorado payday borrowers took out between one loan and six loans.
Let's start with the biggest "WTF" logical inconsistency in this editorial: Stutzman starts by trying to differentiate the fees charged by payday lenders from annualized interest rates by claiming they are "not longterm loans." But then she tries to justify the practice of rolling over these "short term" loans by comparing them to credit cards, where the interest rate is...well, you might not like your rates these days but they aren't anything close to 500%. Whose case did she just prove?
And let's see: 72% of Colorado payday loan customers took out "between 1 and 6 loans." That's a pretty broad range, don't you think? We'll be interested in seeing how many are closer to one loan as opposed to six, but rolling over a $75 fee on a $500 loan six times means you've paid $450 in interest "fees" to borrow $500 for three months. Any prior generation of Americans would call that "loansharking" without batting an eye.
Stutzman concludes by warning that nefarious real banks have explored alternatives to payday loans, offering (wait for it) longer term advances, and substantially lower rates. For reasons not explained in this editorial, this is apparently a bad thing? Very odd. Better loan terms is the 'pain' we'll suffer if payday lending shops are forced to comply with the same usury laws as other lenders? Pretty much all we needed to feel certain this editorial was the product of some quality time with representatives of the Community Financial Services Association (CFSA)--since nobody else would possibly consider a better deal for consumers to be, you know, a problem.
To be clear, we're certainly not alleging any kind of conspiracy or unethical behavior on Stutzman's part. The fact is, this kind of thing happens all the time, lobbyists are continuously shopping editorial boards with their talking points. Hopefully, next time she'll take a few minutes to think critically before paraphrasing a bunch of nonsense right up with a pretty bow.
Here's our single talking point right back at the CFSA: stop spamming us. |
