Ignore The Editorials And Knocking Copy

By Author: Norris Rios
Total Articles: 572
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When someone wants to write about loans, the most common line is to attack the loan industry. Read editorials and you will discover that these sharks target the poor, an opinion with the same level of logic as saying supermarkets target people who want to pay less for their food. Although it's true that people who borrow from one payday to the next at higher rates of interest are in financial difficulty, there's no attempt to look at the real cause and effect at work. All these writers want to talk about are the extortionate rates driving people into bankruptcy. Their editorial line is to support their local banks, credit card companies, and credit unions. These are the respectable faces of the loan industry (and, by coincidence, the banks and credit card companies are usually generous buyers of advertizing space in the relevant newspapers and magazines). Although many of the loan offered by these companies do have high rates of interest (particularly when you factor in the hidden charges and fees that magically appear to inflate the amount owing), there's nothing here that compares with the evil of the payday companies.

Well, ...
... here's a new headline for these newspapers and magazines. People who get kicked out by the mainstream banking system get trampled in the dirt by the fringe loan industry. Let's be clear. Even if we accept the dubious claims that conventional banks and credit card companies are responsible lenders at generous rates, why is it that these loans are not available to everyone? The answer is a sad fact of modern life. Too many people are refused access to bank accounts and associated loans. If this was really a free market with everyone allowed access, the competition between lenders would drive down the rates. More importantly, the competition would remove the need for people to rely on payday loans. Everyone who needed small loans to tide themselves over at low rates would be able to find them.

And as a final thought, just what is happening to the politics of this mess? It seems that Congress can pass legislation that limits the interest on short-term credit offered to members of the armed services but cannot extend the same protection to the rest of America. Why should only military personnel have a cap of 36% of their loan interest? The answer is easy to give. The banks and credit card companies do not want too many people in their systems. They do not want competition to reduce their own freedoms to impose high interest rates and hidden charges. They want their own profits protected. This leaves millions of people out in the financial cold. The only place they can turn is to the payday loan companies. Most are responsible and reliable people. They do pay the high interest rates and, for the most part, avoid bankruptcy. The low paid are the victims in all this and, unfortunately, the vested interests of the banking and finance industry have too much political influence to allow the situation to change. So let's not blame the poor. Let's see them as the victims of greedy bankers who prefer to keep their own million dollar bonuses.