Northeast News
March 2, 2016

Dear editor,

We agree on so many things, but I deplore the steady drumbeat against payday loan lenders. Have you ever wondered why people use payday loan lenders? We have to assume that the average payday loan lender is not stupid. You can fool some people some time, but you cannot build a long-term business by abusing your customer, because they would go elsewhere. But the customer is not going elsewhere.

Why not? Why not credit cards? Because Obama signed the Credit Card Relief Act in 2009 which eliminated a lot of fees that companies could charge to make service to poor people profitable. Poor people are expensive to service: lots of defaults, lots of address changes, lots of irregular payments. The result: over two million people lost their credit cards and now have to resort to payday loan lenders. But why not banks? Well, banks require a permanent address thanks to Anti-Terrorism laws. That may not be attractive to some of our neighbors who may not be in this country legally. Also, thanks to low interest rates by the Federal Reserve, the days of free checking are gone, especially if you don’t have a steady income. If you have outstanding liens, especially to the IRS, then your bank account is fair game. Consequently, a payday lender is a good alternative if you don’t have access to banks or credit cards.

Now, if you get rid of the payday lender, then where are those customers going to go? If they could go to a bank or credit card, then they would have done so already. My fear is the alternative to a payday lender is organized crime. All those who hate the symptom of a disease, should look at the underlying cause first. From there, one should debate if the cure may not be worse than the illness.

All the best,

Thomas Strenge

Historic Northeast resident