Progress Illinois

We've written extensively about the problems with the Payday Loan Reform Act of 2009, introduced by Rep. Luis Gutierrez, who has argued it's the best Congress can do in the face of intense lobbying from the payday lending industry.  Today, the New York Times -- which hails from a state that has banned payday loans without chaos breaking out in the streets -- voices its opposition:

Luis Gutierrez, chairman of the House Subcommittee on Financial Institutions and Consumer Credit, argues that the bill would improve the payday rates in the 35 states with only minimal controls over payday loans. His bill is supported by many people in the lending industry, many Republicans and some consumers.

This regressive bill is even backed by some members of Congress who should know how these loans prey on needy people. New York bans payday loans. But New York’s Gregory Meeks argued in a hearing on the bill that it would provide “options” for people who, in earlier times, “would come back without a limb” if they failed to repay loan sharks on the street.

Others have argued that without these miniloans, people would bounce checks, incurring average costs of $27 or more per overdraft. The overdraft fees that some banks charge are scandalous and deserve more Congressional scrutiny. That does not mean an industry that makes $50 billion a year in loans should be touted as an alternative.