Monday, September 25, 2006

Newspaper Columnist Displeased with Anti-Military Payday Loan Stance

By J.J. Cameron
Payday Loan Writer

Don McNay of The Richmond Register is not pleased.

He wrote a recent column talking about the current fight in Congress over military payday loans. The main target of McNay's wrath? Geoff Davis. Let's read what he has to say, paraphrased …

As John Cheves noted in a recent Lexington Herald-Leader story, there is legislation in front of Congress to limit payday advance lenders to 36 percent interest when they lend money to soldiers. Davis is trying to stop it.

Cash AdvancesThese cash loan providers are big contributors to Congressman Davis’ campaign.

Cash advance lenders say they can’t make money charging 36 percent. Can you think of another business that would whine about a 36 percent limit? When I grew up in the Northern Kentucky area that Davis represents in Congress, some cities were controlled by the Mafia. The mob had a term for 36 percent interest rates: loan sharking.

If a loan shark had charged 390 percent to 780 percent, not only would he have wound up in the river, someone would have thrown all their friends and relatives in, too. Now lenders like Check’n Go are “legitimate” corporations, and their employees can donate huge amounts of money to politicians. So far, they have coughed up $11,450 for Davis.

Davis, corporations taking advantage of soldiers and cash advance loans are a perfect storm of things that plague America. I’m angry about people continuing to rip off soldiers and military people.

When I wrote about Fidelity Investments selling contractual mutual funds, I suggested that Peter Lynch, vice chair of Fidelity, be sent to Iraq in place of a soldier who purchased one of his funds. In addition to sending Lynch, I now want the bad credit payday loan lenders and Congressman Davis to make the same trip.

A lack of payday advance education: Yet, as much as I want to blame everything on Lynch and the payday people, you have to wonder why military people can’t steer clear of them. The American education system has fallen flat in teaching financial literacy. Cheves said that roughly 17 percent of servicemen and women use payday loans. That is an incredibly high percentage, and military people need to know about better options.

Such as pawnbrokers. Even those are better than faxless payday advance lenders. The situation with Congressman Davis is a clear example of why campaign finance reform needs to be implemented. I’m not sure what to do, but there really is a problem.

Davis is a graduate of West Point. When he proposed a bill to ban contractual mutual funds, I thought he was someone who cared about his fellow soldiers. It doesn’t look like it now.

Like most politicians, Davis is going to listen to his biggest contributors. Even if they are providers of payday loans who target military people.For $11,450, you can get the ear of a congressman. Soldiers and people lined up at no fax payday loan offices don’t get that same kind of attention.

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