Tuesday, June 27, 2006

We've covered past editorials that criticize the abundance of military payday loans in the country. The Roanoke Times has now presented us with a similar view. To wit:

I've been pondering the cover story in the June issue of Seapower magazine (pictured) about payday loan victims among military personnel - "particularly those in the lower ranks." And with last week's news fresh in my mind of two young American soldiers– private first classes - abducted and killed, possibly tortured, in Iraq, I am angry.

Low-level service people make up a particularly rich niche for the military payday loan industry, the magazine article informs me: "… They usually have a steady government paycheck with little to spare at an average of $1,200 a month for new recruits. Military families gearing up for deployment face extra expenses at home and abroad and are especially vulnerable to the promise of quick cash from payday lenders."

America's young volunteers are prime targets on any battlefield where the United States chooses to engage its armed forces, a risk the Iraq war makes brutally clear. Moreover, their service makes army personnel prime targets for the predatory fast cash loan industry back home. How shameful.

A government prepared to ask so much of its heroes owes them better. Of course, like civilian counterparts who get ensnared in revolving payday loans, they don't have to get sucked in. People take out the personal loans, which typically are offered as cash advances against a borrower's next paycheck, because they want to. They need a quick financial fix.

Payday loan companies won't turn them down and, by gosh, those outfits are just so convenient. They're everywhere, on Main Street and online. Moderate-income borrowers can get mired in debt, though, when payday comes and they can't cover all their expenses plus pay off the loan. They might take out another, then another, again and again, until they are hopelessly buried under small loans costing them an average annual interest rate of about 400 percent.

This is what passes for business ethics in America these days. Other people's needs are your opportunity. And if satisfying the immediate faxless payday loan need only leaves people more desperate and needing your service again and again, well that's their fault. They are free to make their own decisions. They should have figured out the ramifications for themselves.

Sounds like reasoning a crack dealer could love, come to think of it. But Virginia payday loans are legal, of course, as is the case with most other states. No one is breaking any laws.

So let's change the laws.

The ramifications of poor decisions almost always ripple through society. And in the case of military personnel trapped by predatory lenders, the ripple reaches the nation's level of military preparedness. Seapower reports that the number of sailors and Marines who lost or were denied security clearances because of financial problems jumped from 124 in 2000 to 1,999 in 2005 - of a total for the six years of 5,482.

A geographic study of payday advance loan outlets, meanwhile, shows clusters around military bases. Nationwide, "The number of predatory lending outlets has doubled since 2000," the magazine reports, "and 91 percent of all loans are made to people who take out five or more loans per year, according to NMCRS briefing charts on payday lenders."

The reference is to the Navy-Marine Corps Relief Society, a charitable organization ready and able to give loans and financial advice to people in service. Yet, the society reports, active-duty service members are three times more likely than civilians to turn to payday advance lenders, apparently for fear of endangering their jobs if they make their financial woes known.

I wrote a column a few months back about payday loans lenders, whose predations on the poor I despise. But, I argued, people who are barely scraping by can need a cash advance when faced with a real emergency and nowhere else to turn. Rather than try to ban these quick cash artists in Virginia, state lawmakers should put them under tighter regulatory controls.

After reading the Seapower piece, though, I'm about ready to jump onboard [other alternatives].

This entry was posted on Tuesday, June 27th, 2006 at 7:40 am and is filed under National, Virginia.