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Mr. Bolton's Predators

        He took up his pen and used it as a hammer against the so-called "predatory" payday lenders  week after week in the editorial pages of the Columbia, S.C. State newspaper.  Mr. Warren Bolton is an associate editor and friend of the downtrodden.  He wanted to close down those finance companies which lend small sums to high risk customers at high rates of interest, or, at least set limits on the profit they can make. 

        The South Carolina General Assembly has let Mr. Bolton down.  It has not passed legislation to more tightly regulate the payday lenders who stand to rake in some $186 million per year from people who find themselves short of cash and are willing to sign up for high interest loans. 

        The reason there are payday lenders is people who, through carelessness or bad luck, find themselves flat broke.  They usually do not qualify for bank loans at relatively low interest rates and must turn elsewhere for ready cash.  The payday lenders offset the high risk of these loans with high interest rates and are berated as thieving Shylocks stealing from the unfortunate.  

       A question Mr. Bolton and his comrades in editorship might take up is why so many South Carolinians cannot manage their resources better.  What is forcing so many citizens to enter the money lending dens in the first place?  We have built the most generous system of subsidy and social programs the world has ever seen.  Moreover, society has spent billions on public schools so that people can be taught how to make their way through life in this land of opportunity.  Obviously, thousands of students were absent on the day the teacher lectured on the handling of money and credit because a large fraction of the population doesn't seem to know a thing about it.  

     Recently, Mr. Ben Gallagher's letter on that subject was published in the local paper.  He suggested it would be helpful to teach a consumer finance course in high school.  Ms. Mary Grimball, president of Junior Achievement, promptly responded to assure readers that her organization has been teaching financial facts since 1968 to youth from kindergarten to twelfth grade in Central South Carolina

    Wonderful! Then why are so many people screwing up their finances to the extent they find themselves scrambling for a few dollars to tide themselves over until payday?  The way to put payday lenders out of business is to eliminate their customer base.  The way to do that is to instruct children in real-world terms on the dangers of debt and the folly of not accumulating savings for a rainy day. Something more than an occasional lecture from Junior Achievement is needed.  

    Mr. Bolton is employed by an advertising medium that devotes a lot of space promoting the idea of living the good life with "a little down and a little along."  Consumers are prompted to spend money they don't have on things they don't need.  Hope springs eternal, and nobody expects to be blindsided by a job loss, so they sign on the dotted line to instantly gratify their desire for something ignoring what the weight of debt may do in the future.  Sometimes they find themselves in such a fix they have to resort to a quick loan from the corner payday lender.  

   Will Rogers remarked, "You can't break a man that don't borrow."  Why not devote an hour to that theme in the public school one day?  Why not print an editorial now and then on the subject?  The credit industry would howl, but so what?  If the idea sticks in enough juvenile minds perhaps the need for payday lenders would eventually diminish.  Isn't that a useful goal? 

June 7, 2007

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