Lawsuit filed to require specific language against nanny-state payday lending ban.

A lawsuit was filed against the Attorney General yesterday to include a clear statement of the consequences should a measure that’s soon to be circulated in South Dakota pass on the ballot next November:

South Dakotans for Responsible Lending is proposing the ballot measure. Jackley’s office approved language last month for the measure that would educate voters on what would happen if it passed. South Dakotans for Responsible Lending must collect 13,871 signatures of registered voters by November 2016 to qualify for the ballot.

But Erin Ageton, the vice president of operations for a title loan company, argues that if the measure were to pass, it would cause her employer to close stores in South Dakota.

“I am an opponent of the initiated measure to set a maximum finance charge for certain lenders because I believe it will limit South Dakotans’ access to affordable credit by capping interest rates and charges for certain lenders at such a low rate that they will be unable to cover the cost of extending loans to customers who need them most,” Ageton wrote in an affidavit.

The complaint argues that Jackley’s description of the measure fails to inform voters that the payday lending industry would collapse if the 36 percent limit is adopted by voters. It notes that a 36 percent limit would not be enough to cover the expenses related to issuing loans.

Read it all here.

Ugh. Should a group of people who want to tell others how they should conduct themselves be able to make a fairly benign behavior illegal because they don’t like it? Should they be able to say “don’t do that, because I don’t think that’s good for you, and I’m the decider.”

Despite the fact that it’s legal, and some people are willing to take a chance and risk lending people money who don’t have a track record of handling it well, or paying it back on a timely basis?

The measure seems to be primarily directed towards people who let themselves get in over their head. But, just like nearly any other nanny-state provision, it punishes those who don’t abuse things. Payday lending can be a boon for those who are running short on a short term basis, but it isn’t, and shouldn’t be a salve to chronic spending problems.

I’ll offer myself up as an example – early on in my marriage, (close to 20 years ago) I had some awful, unplanned bill that was due – I believe an unanticipated car repair for a disabled vehicle – approximately a week or so before my monthly paycheck from the State of South Dakota. I obtained a $200 Payday loan, and it cost me $25 – $30 for it, and I was glad to have the car back in service.  It was worth that to me to get my car fixed.

The companies that perform that service have calculated the risk of providing it, and the risks and costs are built into the charges. If someone can do it cheaper, they would be out there advertising it. But let’s not kid ourselves. There are those who don’t pay their bills, and it adds costs for the rest of us.

So, here come the nanny staters with no solution other than to punish the whole for bad decisions of a few.

Are they going to start providing short-term low-interest loans on a statewide basis to people they’ve never met?  Absolutely not.  If they had any intention of providing solutions, they would have been out there working for a private solution allowing them to eliminate the need.

Instead of eliminating the need, they’re out eliminating the ability to fill the need. The need isn’t going to go away. In fact, it will get worse with people being forced to make payments late, be saddled with bounced check fees, or worse.

Promoting a ban on things you don’t like is little more than sticking your head in the sand and saying ‘problem solved.’ It’s an uncreative solution for an age-old problem that many people who work for a living have faced at one time or another.

And fewer ways to solve temporary problems are only going to make things worse for average working class folks who might find themselves in a bad spot.

18 thoughts on “Lawsuit filed to require specific language against nanny-state payday lending ban.”

  1. Is the Rev. Hickey associated with these kooks?

    He tends to dress himself in the nanny garb, and then do things that harms the poor.

  2. oh, Pat. Almost a million is spent on subsidized housing in Sioux Falls. Eighty to ninety percent of those who need this subsidy are locked into payday loans. Since the loan sharks go after them, calls at work etc, and their landlords aren’t as aggressive, who gets the dollars they do have? Answer, the loan sharks. The state picks up the tab for their housing.

    This is just one example of what we are all paying for by allowing them to exploit the poor and elderly. Consumer protection isn’t nanny stating. We have a 15% rate cap on credit small businesses owe. Why give them such a break and allow the individual to get screwed?

    Predatory lending doesn’t solve a persons problems, it exacerbates and adds to their problems. And their problems are soon all of our problems….. $$$$$. 80% of the kids at McGovern Middle School near my house are on free and reduced lunch. Let’s get the poverty profiteers out of the middle – they are exploiting millions from our poor and elderly.

    The Republican hypocrisy is that we will subsidize some businesses (with tax breaks and incentives) all the while crying “let the free market work” in opposing some of these bad businesses we don’t want in our state.

    1. Steve –

      It’s absolutely a nanny state measure. You’re banning all because you don’t like how a few handle it. I heard the same arguments on Video Lottery, and they haven’t changed.

      By what yardstick are you judging some lenders who assume a greater risk to be ‘bad’ and others who assume a lesser risk to be ‘good?’ And what do you propose to do for these people who will have no fall back?

      You call it ‘hypocrisy’ that government subsidizes activities it wants to promote. But doesnt it only doing that for things it wants to encourage? Jobs, ethanol production, and even marriage to name a few. And even those can be controversial.

      Are you saying government should subsidize being poor instead? I think there’s a few people in your caucus who would disagree.

      1. Were the subprime lending relaxed regs of pre-’08 wrong? If so why? Who paid dearly for it? Not the bankers. Why were banks allowed to lend to people who had no business buying a house and why do I as a taxpayer now have to pay the bill? In Iceland the bankers are going to jail, not the borrowers.

        Government does subsidize poor people. My illustration was to show that the monies available to these people aren’t going to pay bills, the government/taxpayer is paying those. The payday lenders are buying 9 million dollar second homes on Newport Beach.

        Just saw another blogger posted about how pot regs are nanny state policies too. Why ban something because we don’t like how potheads abuse it? (It’s just an argument. I oppose smoking pot).

        1. Business owners made money? I shudder at the thought. Or are you objecting to the amount they make.

          When did profit become a dirty word in the Republican Party?

          As I noted elsewhere, there’s a difference between lending money and illegal drugs. Especially one that leads to abuse of harder drugs.

        2. Steve, are you going do as good as a job on these petitions as you did on your own? So, did you actually circulate them or did Peters and Deelstra? Would be kinda nice to know if you can be trusted.

        3. It’s time that Christians gather to oppose any further candidacies of Steve Hickey.

          What an embarrassment.

    2. “in opposing some of these bad businesses we don’t want in our state.”

      Who the hell is Steve Hickey to tell ANYONE what is a “bad business” or not.

      Steve Hickey is a bad person and we should ban him from SD.

    3. “The Republican hypocrisy is that we will subsidize some businesses (with tax breaks and incentives) all the while crying “let the free market work” in opposing some of these bad businesses we don’t want in our state.”

      Sounds like you’re arguing that payday lenders should be subsidized! (Do you understand LOGIC?)

      Which is it, turdmuffin?

  3. Why is it okay for a bank to charge a $30.00 fee for a $10.00 overdraft? And won’t that happen more frequently if this passes?

  4. Steve,

    If a self proclaimed Biblical scholar asserted that Mary Magdaline’s prominence was an endorsement of prostituition or sending male disciples off “two-by-two” meant they were gay, I am pretty sure you would call it nonsense and tell people not to consider that scholar worthy to be listened to.

    Just know that your little rant above is of as much nonsense of linking sub-prime meltdown, public subsidy etc. to payday lending is analogous to a “scholar” who said the above. Your lack of understanding of finance and economics warrants you being ignored on such matters.

    1. Troy, you again are the expert. And to think all us commoners were led to believe irresponsible lending was the leading factoring in the dominoes of Leyman Bros, Fannie Mae, etc.

      1. The meltdown was at its core either an explicit or implicit federal guarantee on repayment of sub-prime loans (false and artificial incentives to make bad loans). It is wholly and completely irrelevant to payday lending as there is no explicit or implicit guarantee from the federal government.

        If one wants to advocate eliminating these loans, go for it. Just don’t use specious and dishonest arguments.

  5. It is nice to see the moderates attacking one of their fellow RINOs instead of conservatives.

  6. I have long been a part of these discussions and confrontations on payday lending. I’ve always found it interesting that the people who complain about the loans and lenders are predominately people who don’t use the product but rather are people who complain that others do use it.

    That creates an interesting juxtaposition with free market principles. Namely that if payday loans are so bad, why are they so popular? If no one wanted them, no one would offer them, right?

    Moreover, there seems to be plenty of competition in the marketplace. There are competing lenders with storefronts in many towns, and there are competitors on the internet as well. My experience tells me that pricing would be a point of competition along with service, atmosphere, personality and all the other points where other businesses compete. Competition is a good thing isn’t it? We seem to enjoy it in this particular market, and its healthy in my view.

    Getting back to the question: Why are these loans offered and taken? The answer of course is found in notions of individuals’ needs/desires. And what is need to one person is simply desire to another. I think freedom to choose how to lead one’s life is a positive attribute of life in these United States.

    Thanks for the discussion PP.

  7. Steve Hickey: “Almost a million is spent on subsidized housing in Sioux Falls. Eighty to ninety percent of those who need this subsidy are locked into payday loans.”

    This is a lie or evidence of gross ignorance. Period.

    1). I will bet Hickey whatever he wants it is not even close to 80%.

    2). Getting subsidized housing is almost entirely based upon income and size of family. Debt is not a consideration.

    Hickey: “Since the loan sharks go after them, calls at work etc, and their landlords aren’t as aggressive, who gets the dollars they do have? Answer, the loan sharks. The state picks up the tab for their housing.”

    Another lie or example of gross ignorance. Period. Again, the State doesn’t make rent payments for people who don’t make their payments.

    I get someone reaching a conclusion from experience or perspective and wanting a law changed. I don’t get the position being advocated by its leader using deception or failing to be even minimally informed.

    1. I too caught the good reverend lying in a thread on the death penalty.

      Apparently it’s fine for men of the cloth to lie as long as it’s in support of their causes.

  8. Still no comment from the Hickey about those petitions, he must be following his lawyer’s advice to remain silent.

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