There was a reason why Utah’s payday loan operators (it gives them way too much dignity to refer to them as an "industry") poured so much money into the campaign coffers of the now-disgraced John Swallow. They needed someone in power to protect them from the righteous anger of public officials who take seriously their mandate to serve the people.
Now that Swallow has resigned as attorney general, and the legal loan sharks no longer have such a powerful friend, legislators are properly moving to rein in some of the more heinous abuses practiced by such flimflammers.
Fittingly, it is Rep. Jim Dunnigan, a Republican from Taylorsville, who is sponsoring HB127, a bill that would put some long-overdue restrictions on how payday lenders ply their trade in Utah. Fitting because Dunnigan was also the leader of the appropriately aggressive House investigation of Swallow’s various misdeeds.
Payday lenders not only lined Swallow’s pockets with large amounts of cash — for which they expected a different kind of payback than they get from the poor folks who get mired in their 400 percent interest traps — they financed the stealth campaign of lies that helped end the political career of former Rep. Brad Daw, R-Orem.
Dunnigan’s bill, which mirrors in many respects equally good bills put forward by Rep. Larry Wiley, D-West Valley City, would require that payday lenders stop extending their flypaper loans to just anyone, over and over. They would have to exercise some minimum care to see if the borrower had any hope of repaying the loan before it turned into a deep cycle of penalties, lawsuits and overdraft charges.
The proposals would also require lenders who sue borrowers for non-payment to file in the community where the borrower lives, or where the loan was taken out. That way, debtors who live in St. George can’t be forced to contest a lawsuit filed in Orem, which is too often the case today.
What these measures do not — and at the state level, probably cannot — address is where low-income families could go for small loans if the payday lenders no longer see such large profits in entrapping them.
One idea comes from U.S. Sen. Elizabeth Warren, D-Mass., who would allow U.S. Post Offices to make and service small loans to the unbanked. That would help the poor even as it gave the Post Office a new reason for sticking in small towns and making up its huge operating deficit.
Whether that happens or not, Utah lawmakers should proceed with the Dunnigan and Wiley measures. The limits are long overdue.
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