Can state lawmakers find the nerve - and the votes - to neuter payday lenders?
I've been a brick layer's helper during the summer in Louisiana, washed dishes in greasy restaurant kitchens and even schlepped insulation at a demolition site, but the worst four days of my employment life happened in an air-conditioned office in July of 1994 - an office, coincidentally, that used to be right across Jefferson Street from my current and undeniably awesome source of paychecks.
It's gone from downtown Lafayette now, chased off by redevelopment and an attendant rise in rents. But I saw a branch along the depressing downtown drag in Many, La., when I was there for a recent story. It was just as seedy and threadbare as I remembered. We're talking short-sleeved dress shirt with clip-on tie seedy.
My first-born child was 6 weeks old when I saw the help-wanted ad in a classified paper, and at the time being the part-time night manager at a restaurant with a degree in English who played music on the side just wasn't much of a bacon maker. I didn't know anything about "finance" except that I wasn't getting enough of it, but my utter ignorance about money was no barrier to employment in this industry. These folks practically fell over themselves to get me on the payroll. Why was this position so hard to fill? After a day of training I realized why.
My job involved calling mostly single moms and old ladies, all of them poor and almost all of them black and under-educated, to tell them their $500 loan had ballooned to $750 and was climbing and could I please come by and pick up the money or get them on a payment plan. The script I worked from stopped short of insinuating dislocated thumbs, but the gist was the same: This thing is gonna get bad unless you pay up, and the longer you take, the badder it's gonna get, Mrs. Celestine.
The interest rates the company charged for small loans were debilitating - 200, 300 percent. I'm not even sure exactly. They were unmanageable - I know that. And I never made a trip to collect on a loan, although I did get a few to agree to payment plans, which
I think was the whole point: Get them on a plan, keep them in perpetual debt. The interest rate would ensure they would never catch up. Just pay and pay and pay.
On the fourth day, before lunch, I turned to the manager and told him I just couldn't do it anymore and walked out into the most welcome summer heat and humidity I will ever know. I retired my clip-on tie forever that day, but the experience cast in dismal color my view of this hemorrhoid on capitalism's butt, which has proliferated over the last two decades.
A pair of bills the Legislature will consider when it convenes this month could act as an antidote against payday lenders, a close cousin of finance companies; their shared DNA is ultra-high interest rates, though finance companies' rates are generally not as outrageous.
The bills - one in the House, the other in the Senate - would cap the interest rate these lenders could charge at 36 percent. That's still high - most major credit card companies charge no more than 24 percent annually, and you can buy a house or a car at a much, much lower rate - but far from 300 percent.
This has been tried and failed in the past. There are some deep pockets behind the payday loan industry. Sure, they're helping keep the poor in poverty - that's the business model - but the mortgage on a 5,000-square-foot, waterfront vacation home is expensive so, you know, whatever.
The bill in the Senate is co-sponsored by a Republican and a Democrat, which will surely help smooth the path. And after the ravages of the Great Recession, which cast a lot of chum into the water for these sharks, the urgency to act is real.
I should probably be thankful for the experience: The unbearable weight on my conscience squeezed me out of the workforce and into the sublime respite of graduate school where for 15 months I wore a bushy beard, read a lot of Dickinson and Whitman, and watched my daughter do her first of a lot of things.
Capping the interest rate for these predators could definitely strike a debilitating blow to the industry in Louisiana, leading to some layoffs. And what to do with this legion of newly unemployed? Don't ask me, but schlepping bricks and insulation would be way more pleasant.