Like all card-carrying economists, we’re of two hands (minds) about Sen. Bob Corker’s insistence that the new consumer financial protection agency be stripped of authority to regulate “payday” loans – very short-term, very high-cost loans collateralized by borrowers’ future paychecks. On the one hand, the industry seems to be competitive – lotta lenders out there, operating in a lotta locations. Moreover, payday loans are voluntary contracts – nobody makes borrowers accept the terms. And if regulators went further than demanding tough disclosure rules and capped the interest rates charged on payday loans (as a lot of consumer advocates want), the price control could arguably lead to genuine losses in economic welfare.
On the other hand, the payday industry operates in a market that barely passes the sniff test for efficiency. While relatively few of the borrowers are old or wretchedly poor (you must be employed, or at least eligible for unemployment benefits, to get a payday loan), they probably aren’t especially financially literate. And loan costs are typically charged as fees – which makes one wonder whether borrowers have a clue about the implicit interest rate they bear. A $15 fee on a two-week, $100 loan works out to an effective annual interest rate of 3,685 percent.
And then there’s the matter of influence peddling. The Tennessee Republican senator’s interest in the payday loan industry seems directly connected to the interests of his friend and financial supporter, W. Allan Jones, the founder of Check Into Cash, America’s third-largest payday loan purveyor. We’re not naïve about how money politics works: it’s a game everybody plays. But Sen. Corker’s relationship with the payday industry seems particularly unsavory.
Even some well connected political conservatives are uneasy about payday loans – at least when it comes to loans to America’s fighting men and women. With backing from the Bush II Defense Department in 2006, Congress limited the interest rate on payday loans to servicemen to 36 percent as part of the defense appropriations budget.
The best way I can think of to put a stop to W. Allan Jones of Check Into Cash and Jones Management is to ask Senator Bob Corker to stop voting in Congress for questionable payday lenders like W. Allan Jones of Check Into Cash. Though W. Allan Jones tries to downplay his generous contributions through the payday-lender-run website, Payday Pundit, I am guessing that friends, family, and employees of W. Allan Jones and Check Into Cash are also contributing quite generously.
Without the support of Senator Bob Corker, W. Allan Jones would never be able to get away with his ridiculous behavior. Call Senator Corker and tell him to stop supporting W. Allan Jones at Check Into Cash at this number:
423-756-2757, or write him at this address:
U.S. Senator Bob Corker
185 Dirksen Senate Office Building
Washington, D.C., 20510
or visit his website:
http://corker.senate.gov/public/
It’s disturbing to see Senator Bob Corker more eager to line his pockets than to help those who voted to put him into office. How are you helping the average American, Senator Bob Corker, by lobbying so aggressively for the payday industry? How is it that you are so willing to be bought-and-paid-for by W. Allan Jones, Check Into Cash, and Jones Management? Is it worth the loss of your integrity and credibility?
Nice job, Senator Corker. Way to go protecting your constituents. And so cheaply, also. W. Allan Jones and Check Into Cash is reportedly worth $500 million! Next time you decide to sell out your constituents and sell your soul to W. Allan Jones and Check Into Cash, don’t do it so cheaply! Ask Jones to give you his Maybach at least! Jeez.