Education solution to predator lenders

Published 12:01 am Sunday, January 16, 2011

Mississippi lawmakers are attacking the symptoms involved in so-called payday lenders, but ignoring the disease. Predatory lenders target the most vulnerable among us — the poor — with the promise of quick cash, the allure of which drowns out the almost 600 percent interest these lenders are allowed to charge.

The House Banking Committee on Tuesday passed a bill that would allow lenders to continue to charge exorbitant interest rates, but also allow borrowers longer to pay back the loans. The state is tackling a symptom — the amount of time to pay back a loan — and ignoring the disease, the targeting of the most vulnerable citizens in our state.

United Way of West Central Mississippi Executive Director Barbara Tolliver just last week said her organization has received a grant to help teach people in five area counties how to handle their own money and budgets. “Most of these people don’t even realize what they don’t have,” she said.

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Tolliver can see the problem and is tackling it through education, not through expanding the time allowed for payments.

Think of the timeless Chinese proverb: Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. Teaching our most vulnerable citizens how to “fish” with their finances, in the long run, will do so much more to further this state than giving them a fish — and asking for 10 fish in payments less than a month later.

State lawmakers have an opportunity to end a scourge on our state, but unlike Tolliver and the United Way, they choose to treat a symptom and allow these predators to continue to operate.

These operations make loan sharks sound legitimate. Those with knowledge of how these operations work stay far away. Predatory lenders are banking on those without the education, the knowledge or the vision of how these loans will eventually affect them.

Lawmakers like to say they are out to help the people. But this proposed legislation is not helping. Putting the predatory practice out of business would truly be a help.