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A recent article in Governing supports the elimination of payday lending, basically. It discusses how Montana capped the rate for these small-dollar loans at 36 percent in 2010. The average had been round 300 percent. Dozens of payday lenders closed in the next year. Now, 300 might seem exorbitant and 36 percent might seem like a lot to those in the auto business, but remember, these are small amounts that are supposed to be paid off in a short period of time.

People in Montana started to go online. the typical rate went to 600 percent from 300 percent. Complaints about payday loans went from one prior to the new cap to 101. But it's OK, the article tells us, because it declined into the teens. According to my math, that's still 10 times what it was before the new cap. And all a lack of complaints indicates is a lack of complaints, not a lack of problems. People could have just gotten used to the new normal. 

if there was only one complaint before, why did the state cap the rate? It was done through a ballot initiative and it's important to remember the torches-and-pitchforks mood of the general public in 2010. This was something.

The article says that when people couldn't get the payday loans, they turned to other sources, such as pawn shops and hitting up friends and relatives. I'm not sure this is better. First off, poor people tend to have friends and relatives who are, you know, also poor, so either they can't lend the money or doing so puts them in a financial bind. As for pawn shops, well, i guess some people would see those as an alternative. Not mentioned is another source of funds for the folks that used to visit payday lenders – loan sharks. And in these cases, the terms are even more punitive

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Ted Craig

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