Officials are considering a six-month ban on new payday lenders in unincorporated Salt Lake County, hoping to buy enough time to bridle what council members consider a morally questionable business.
The County Council - which informally endorsed the idea unanimously this week - will decide Tuesday whether to enact the moratorium.
"I don't think the free market is going to regulate this industry," Councilman Joe Hatch said. "We have a duty to our citizens to at least limit its growth."
The moratorium isn't exactly what Hatch had hoped for. The Democratic councilman has spent more than a year lobbying for restrictions on payday-loan stores based on population - limits that would keep the check cashers from congregating too closely or to cap the number of stores in a community.
But Hatch isn't complaining. He called it a "wonderful delay" for reeling in an industry he considers predatory.
But Cort Walker, spokesman for the Utah Consumer Lending Association, doesn't like the idea.
"This is bad for Utah consumers and particularly for Salt Lake County consumers," he said. "What local governments are doing is limiting the number of options that consumers have to choose from. As competition is limited, the motivation of lenders to decrease their pricing goes down."
So instead of improving the industry, Walker said, the proposed moratorium could do a world of hurt.
It could keep bad lenders in and good lenders out, he said - absent of the free market that would eliminate the industry's bad apples on its own.
Salt Lake County's dissatisfaction with the check-cashing trade isn't unique. For example, officials in West Valley City, South Salt Lake, Taylorsville, West Jordan, South Jordan, Draper, Sandy and Midvale already have imposed density restrictions on the industry.
Republican County Councilman Jeff Allen is no champion of the payday-loan industry. He doesn't like their lending practices and would prefer to see such businesses "go away."
But he agrees with Walker on one point: A free market will do the industry good.
So Allen objected to Hatch's proposed crackdown on the check-cashing businesses - "it entrenches the problem," he said, "and ensures their financial viability by taking away the competition" - and supported a six-month moratorium to study the issue.
"Competition raises the level of service," Allen said. "If we just make it a free-for-all, they end up cannibalizing themselves."
Democratic Councilman Jim Bradley isn't so sure.
"Generally speaking, the population that uses businesses like this [isn't] as discriminating about who is going to give them the best deal," he said. "It's about which is the closest one."
Walker urged the County Council to reconsider, describing his industry as "welfare-enhancing."
"If there wasn't a demand for us," he said, "we would be out of business."
