A recent editorial in the San Jose Mercury News shines a much-needed spotlight on payday lending, a topic that we blogged about in June and that was the subject of a 2008 CBP report. Pulling no punches, the editorial concludes that ”predatory payday lending … can destroy the lives of the most vulnerable [and] it should be banned.”
The editorial cites a new report published by the Silicon Valley Community Foundation (SVCF), which calls for continued efforts to impose interest-rate caps on high-cost payday loans “or other controls to protect consumers.“ The SVCF report also cites the CBP’s own payday-lending study, stating that “the California Budget Project provides a compendium of alternatives to payday lending that should be considered as potential content for a financial education course designed to help consumers avoid payday borrowing.”
Although evidence against payday lending keeps piling up, meaningful payday-lending reform remains elusive in California. In fact, the major payday-lending bill that the Legislature considered this year (AB 377) actually would have increased the size of payday loans that Californians could take out – a change that would be a boon for payday lenders, while leaving more Californians mired in even more payday-loan debt. AB 377 passed the Assembly by a wide margin, but stalled in the Senate Judiciary Committee in July. The bill remains on life support and may be revived in 2010.
— Scott Graves