If you were to do a Google search to look for articles about the payday lending industry, chances are you’d find hundreds of articles and op-eds that preach about how evil this industry is. One such op-ed was recently written by Gary Kalman from the Center for Responsible Lending. In this piece, titled “Stop the debt trap” Kalman uses a tone of sternness when talking about payday lenders. In fact, this op-ed pretty much condemns the industry altogether. Despite the fact that CRL has waged a war against payday lenders for decades, and has even done so via subsidies received by taxpayers and utilizing federal regulators, the fact of the matter is that all of these criticisms of payday lending continue to drive business to Self-Help, a credit union that is professionally affiliated with the Center for Responsible Lending.
Kalman, for his part, continues to state that his organization is simply “fighting to rein in the abuses” (alleged abuses, we might add) of payday lenders. This is both misleading and insincere. And the same thing could be said about how the Center for Responsible Lending has continued to malign the actions and character of both payday lenders and the very customers who depend upon these types of loans.
The bottom line is that Self-Help makes it a point to offer financial services/products that would definitely derive a benefit if payday loans were to be completely removed from the market. The network of businesses and groups that make up the Self-Help group – which have already received a combined $380 million-plus in loans, grants from the government and other taxpayer funds – has put millions of dollars into the pockets of lobbyists who are petitioning the federal government to take more serious measures against payday lenders, including putting new regulations on the industry.
The Center for Responsible Lending spouts off about being the “customer advocacy” branch of Self-Help. It has made use of the funding it receives – funding it has been hauling in for twenty years now – to fuel its smear campaign against the payday lending industry. It continues to disparage the industry and the loans that it offers, and to anyone willing to look into the matter, it is looking to get rid of its stiffest competition; noting more, nothing less…
Experts on the subject have been wondering if Self-Help’s financial products are more costly than the terms that most payday lenders offer. The fact of the matter is – regardless of affordability – Self-Help offers short term loans to consumers. As such, the organization has directly benefited from the restrictions they have fought so hard to saddle the payday lenders with. The elephant in the room is just how this organization is getting away with using the government to punish its competition, while they continue to carry on business as usual.
Recently, a new regulation was passed into law in Oregon. This law puts a cap on short term loan interest rates and “…reduced access to payday loans in Oregon, and … former payday borrowers responded by shifting into incomplete and plausibly inferior substitutes,” according to one published study. “Most substitution seems to occur through checking account overdrafts of various types and/or late bills.”
With all of this in mind, it is clear that many of the payday loan opponents out there – especially those who are especially vocal about the subject – are biased. In the case of the Center for Responsible Lending, it is apparent that this organization is biased for a very good reason: The elimination of payday lenders would be most profitable for this group, indeed!
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