Ask Mr. Fix it

Payday loans borrowers have rights. They've the right to find out simply how much their loan will probably cost them. They have the right to return the money they borrowed before the end of the day if they decide they changed their minds. They have the right to know about dispute resolution. The funny thing is they have the right to know so much, that the majority of payday loan stores will hand you a couple pages of fine print on your rights and have you sign something at the bottom saying you waive your right to a jury trial and you do so knowingly. Regardless of the volumes of information payday loan places provide, human notice themselves going to payday loan places and signing on the dotted lines anyway. It makes one wonder whether knowing is enough. How can one know and yet take decision of something that has been compared to usury? Is it ignorance, lack of interest, or something else altogether which keeps the industry in customers at such a rate that the business seems to be flourishing while other businesses are floundering?

To say the issue raises concerns is an understatement. It's tough to have sympathy for an industry that seems to have thrived while the country is experiencing one of the toughest financial crisis in recent memory. The payday loan industry has definitely profited, having become in fact, "$28 billion industry nationally, according to the Center for Responsible Lending" (Associated Press, 2007). As the industry develops, it leaves us wondering how people would willingly pay 480 percent. Ray Fisman, in The Dismal Science, puts the query "Do people take out payday advance loans because they're desperate, or because they don't know the terms?" What Fisman almost asks but doesn't is are people stupid or don't they know that one $500 loan from these organizations probably costs them $2692 a year? These seem to be the same individuals who then blog questions like, "Is my payday loan place going to have me arrested? Are these businesses preying then on the stupid?

Yet, nobody is forcing them to go. Or are they? It has been suggested that our current economic crisis has made it almost impractical for the average person to get a loan in any other fashion. In response to the push for more stringent borrowing practicing, traditional banks are turning away traditional borrowers. Perhaps it is not a coincidental bond between the push by banks to be stricter and the responsiveness of the fringe industry to grow as a result. Cash loan lenders aren't stupid. Like every belligerent kid, they understand there is a limit to how far you can push until you get, proverbially, smacked in the head.

President Obama has made a point of stating that America, to be economically strong, needs to be competent to have credit. If this is the case, we are looking at a new wave of Americans who have been forced out of the credit game, disenfranchiseed by a banking industry that was irresponsible enough to loan to careless customers forcing mainstream America to select an even stupider path.

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