Online Payday Loan Industry Wants to Keep Charging Obscene Interest Rates
Payday loan offices were sprouting up in strip malls and on street corners across America for years before Wall Street collapsed last fall - quiet evidence that hard times began hitting working families long ago. Now, more people than ever are using payday loans to keep bill collectors at bay. Quick money (at interest rates of around 500% or more), for people with bad credit has been praised by some as a lifeline for the poor and condemned by others as a cynical trap exploiting families in crisis. Some states have passed laws limiting interest rates, but there is one marketplace that knows no borders -- the Internet.
ANP videographer Lagan Sebert has been tracing the many ways Americans have been ringing up record debt. For this story, Sebert first staked out a conference on Capitol Hill where online payday lenders and lobbyists honed their arguments to Congress against reform; then he traveled to a small town near the Virginia-North Carolina border to learn about the experiences of a man who one day googled "bad credit loans" and soon found himself in more trouble than he bargained for.
Illinois senator Dick Durbin's bill, the Protecting Consumers from Unreasonable Credit Rates Act, has been referred to the Senate Banking Committee where it will be up to the man who seems to be everywhere these days, chairman Chris Dodd (D-Conn.), to schedule a time for the committee to review the bill. Durbin's proposal would put a national cap on interest rates at 36%. So far Dodd has not indicated when, if ever, he will call a hearing to consider it.