My colleagues at Credit Slips write a blog that generally bashes credit grantors and bleeds left wing sympathy for the poor. OK. I am closer to being a rich guy that a poor one, but so what? I ain’t apologizing. I grew up in a nice home, had my parents to pay for my undergraduate and law school degrees. I have thus far had a wonderful and privileged life. I am pleased as G-d has been good to me.
My colleagues at Credit Slips have recently taken to bashing the Payday loan industry in blog entry entitled Predatory Lending: Robin Hood in Reverse posted by Keith Kilty. I don’t know Mr. Kilty or the amount of experience he has talking with the owners of these business. I represent one such entity as its lawyer. I can tell you that it takes a lot of money to pay the start up costs of the the business, pay employees, rent, security and other over items. Pushing all of that aside, Mr. Kilty may not know that a good deal of the checks that are written by Payday customers go bad. When they do, someone has to eat that loss. If the business owner were to eat that ENTIRE loss, he would find himself out of business. The Payday loan business owners protect themselves against these eventual and unavoidable losses with a higher interest rate. Hence, everyone pays a premium to cover the losses that are bourne by the business owner due to the relatively high frequency of these Payday loans going bad. If their interest rates were cut by law, many Payday business owners would simply close up shop. Hence, a Payday customer needing cash immediately would have one less available option to solve the pressing cash need. Is that a solution that Mr. Kilty would prefer? While I understand that some state legislatures are beginning to examine the business operations of the Payday loan industry, one can be sure if that interest rates get cut by statute, many of these business owners will close and do something else with their investment. Is this a direction that Mr. Kilty things would be good for the poor? I sure don’t think so.