The New York Times has taken a stand critical of a proposed federal law which would cap the interest and fees from payday loans at 15% across the country.
The measure, authored by Rep. Luis Gutierrez, (D-Ill.) has 28 co-sponsors in the House and has been opposed by the payday loan industry. The Times' called the Gutierrez bill "ersatz" and suggested that it would not go far enough to solve the problems critics charge payday lending brings with it.
"Payday loans–advances that are to be repaid on payday–are so burdensome and so pernicious that in 2006 Congress effectively banned them for military families," the Times noted. "Given all the problems workers face right now, Congress should extend this protection to everybody. Unfortunately, some members are pushing an ersatz reform that would allow payday operators to charge what amounts to an annual percentage rate of 391 percent."
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"A better option is already in place in some states and for the military–keeping short-term or small loans under a 36 percent annual interest rate, which is high enough,' the paper said. "Representative Maxine Waters, a Democrat from California, assessed the Guttierez bill correctly when she said: 'We've got to resist any attempt to make it look as if we are cracking down, when in fact we are opening the door to more abuse.'"
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