Cooper Kicks Last of the Payday Lenders to the Curb

One area where North Carolina has been a progressive leader is in stopping predatory lending. One of the blemishes in the State's record has been their inability to get rid of a number of payday lenders who have been claiming to be exempt of the 2001 law banning their practices. This story chronicles the settlement that the lenders entered into with Attorney General Roy Cooper to stop their practices:

The three payday lending chains still operating in North Carolina have signed agreements with state regulators to stop making loans by March 11, N.C. Attorney General Roy Cooper announced Wednesday.
The deals seem to end a nine-year period in North Carolina in which public companies, operating bright stores on busy streets, offered loans of up to a few hundred dollars in exchange for a chunk of the borrower's next paycheck -- the amount of the loan plus a hefty fee.
To borrow $500, a customer might write a check for $600, dated two weeks later. That's an annual interest rate of 521 percent.

Comments

the problem with borrower

the problem with borrower protection laws is that if people need money they will do what they need to do to get it.

If commercial banks aren't allowed to make loans over 40% interest or whatever risk premium is necessary for them to protect their assets, then you get a huge increase in things like payday lending, where people have to pay outrageous rates to borrow. Also will be a huge increase in pawning goods for money. And if you get rid of payday lending, there will be something else, probabaly worse, stepping in to fill its place.

people need money. allow honest banks to charge them interest rates that fit their risk for lending, instead of forcing them to go to a loan shark that will kill them for not paying back 1000% interest or whatever they charge.

Some Banks Do

I know that the State Employees' Credit Union will make small personal payday advance loans at rates higher than their other loans but much lower than shady payday lenders.

Also, don't forget that payday lenders are also part of the debt problem for NC's poor. I hear what you're saying, but getting rid of payday lenders will get rid of part of the debt problem North Carolinians face. Hopefully a significant portion of those who still need advances will go to credit counseling, rather than the mafia.