The op-ed at the Seattle Times is typical of the criticism that payday lenders endure.

First of all, who the heck is Fred Corbit?  I mean, people might also say, “who the heck is Clark Reilly?”.  The difference between Corbit and myself is that Corbit doesn’t rely on any actual published data to make his case, whereas I try to back up everything I say.

Corbit says, “Instead of taking a one-time, short-term loan, many payday-loan borrowers fall into a cycle of long-term, high-cost debt.”  There’s that cycle of debt claim, but because the editors at the Times don’t ask for evidence, Corbit’s claim goes unchallenged.

It looks like Washington State changed its law in 2010 to limit the number of payday loans a person could use each year to eight.  I don’t understand government should decide how many loans someone can take out, but I’m not surprised by this law, either.

So Washington actually publishes information on loan usage.  Here’s the 2009 report.  66% of loan users were already using loans eight times or less, so why did the government feel the need to restrict the other 34%?

Times are tough.  If you need a loan, why should the government say how many times you can use a loan?  If it was too expensive, then the customer would use something else.

And nobody seems to be complaining, either.  The DFI got 216 complaints in all of 2009, out of 415,371 borrowers.  That’s means about one-half of one percent complained. On a per-loan basis, with 3 million loans made that year, that’s – let’s see – a 0.0072% rate of complaint.

I bet the Washington State DMV has a worse record that that!

It also looks like that 2010 law lets people convert to a long term installment loan any time they want to.  And from the 2011 report, it looks like payday lenders had a hard time staying in business.

603 stores were around in 2009, reduced to 256 in 2011.  Wow.  That means almost 60% of the stores just shut down.  So that means a lot of people lost their jobs, too.

Corbit said, “regulation of the payday loan industry does not hurt our economy. “   I’d say that, no, regulation doesn’t hurt but over-regulation should does!

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