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.
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.