"Payday loans trap borrowers–it's that simple," said Uriah King, policy analyst with the center. "Even the payday lenders admit they need their customers to re-open their loans many times at these astronomical interest rates just for their business to survive. We're all for good, responsible credit," said King. "It's just got to be done without basing your business model on gouging low-income borrowers."

Responding to complaints about payday lenders in cities and towns with military bases, Congress last year capped interest at 36% for payday and car-title loans to military families. The Pentagon had reported that predatory payday lending was threatening not only the quality of life of military families but the combat readiness of its servicemen and women.

The center traced the growth of payday lending back to the late 1980′s, when it quickly swept across the country as lobbyists for the industry convinced state legislatures that their two-week loan product should be exempt from annual interest rate limits. Now, advocates and policymakers are increasingly coming to understand that the two-week loan is a myth, the center found, as evidence mounted that the industry relies on repeat loans going to borrowers caught in a cycle of debt for 90% of its revenue. Loan terms had been designed to keep the cycle going in a never-ending cycle.

The fight against predatory lenders of all stripes has had a roller-coaster history. Former Sen. John Edwards, who recently concluded his bid to win the Democratic Party nomination for President and endorsed Sen. Barack Obama (D-Ill.), took up the fight. Edwards lambasted the Treasury Department in an opinion article in The Charlotte Observer on May 20, 2004 for "gutting states' ability to protect their citizens from financial scams." The Treasury Department turned a blind eye to the straits of millions of American families, he said, when it issued new rules exempting national banks from state consumer protection laws in January 2004.

More than three years before the mortgage meltdown–in fact, on the very cusp of what was to become the boom that led to the bubble–Edwards' wrote: "New threats to working families' financial security couldn't come at a worse time. In the last generation, families who used to save to get ahead are now borrowing just to get by. Home foreclosure rates have tripled. This year, more middle-class children will see their parents declare bankruptcy than will see their parents get divorced."

Addressing subprime predatory mortgages specifically, he noted, "There are mortgage lenders that cheat people, plain and simple. Excessive fees leave families on a treadmill, forcing them to make large mortgage payments while draining the wealth they have saved in their home. Many families lose their home altogether. In particular, predatory lenders target African American and other minority communities. About half of subprime borrowers are paying extra interest and fees when they qualify for better rates. Even worse, some families see their loans refinanced again and again, their equity diminished time and again, until one day they lose their home. All told, predatory lending costs homeowners an estimated $9 billion a year."

North Carolina, and particularly the credit unions of the Tar Heel State, led the fight against all types of predatory lending when it passed a law in 1999. Self Help Credit Union and the Center for Responsible Lending, backed up by the largest credit union in the state, State Employees' Credit Union and its President Jim Blaine, were key to the law's passage. It was estimated that consumers would save $100 million a year from such protection. Edwards, meanwhile, downplayed opponents' contention that access to credit would be restricted if such protective laws were passed. "Mortgage credit remains widely available," he said. Edwards made the fight for financial equality the cornerstone of his presidential bid, highlighting the "Two Americas."

The same repeat cycle Edwards applied to subprime mortgage lending is also true of payday lenders, which is why both Republican and Democrat leaders in Congress and states across the country have joined military, faith-based, business and civic groups in advocating for a reasonable limit on interest rates, said the center.

The center has recently noted a change in tactics taken by the industry. The payday lending industry "promotes measures that appear to reform their practices, but have proven to be ineffective in decreasing the rate of borrowers caught in a debt trap in state after state. The two-digit interest rate cap stops predatory lending while leaving room for responsible lenders to offer cheaper consumer loans," it said.

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