Four reasons why the poor stay poor
A look at four reasons poor Americans stay poor. Examine statistics related to wages, gentrification, home ownership and payday loans.
Michael Nyerges, Cincinnati investigator
Springfield City Council may have changed its mind on stricter regulations for short-term lenders after hearing recommendations from a city-appointed task force.
Council members said they would consider a proposal placing more demands on payday lenders and car title lenders, including a previously opposed $ 5,000 annual license fee that would require local voter approval. .
Advocates have said for years that payday loans trap people in a “debt trap” where a loan of a few hundred dollars can reach hundreds more that the borrower cannot repay.
City officials have considered a number of measures to address the issue, but some council members opposed the measures, saying a state interest rate cap would be the best way to address it. .
Working group co-chair Brian Fogle said on Tuesday his group largely agreed, but noted that the city passing its own bylaws could help educate the public and shape a commitment to address the issue.
Previously: Critics say payday lenders are preying on the poor. Here’s how the city could regulate them
“There is nothing better than a cap,” he said. “But we think if we can get something to Springfield… it helps that effort.”
Data from the Missouri Division of Finance shows that in 2019, residents took out 31,439 loans for an estimated total of over $ 9.5 million.
These numbers are significantly lower than those recorded in 2011, when people in five local postcodes took out more than 101,000 loans for a total of $ 33.5 million.
Fogle said the use of traditional short-term loans has declined in part due to the improving economy. Online lenders have also replaced the use of many physical locations.
He said that despite this, it is important to tackle the problem locally and help educate the public about the harms of short term and high interest loans.
“Violation of the social contract”: City Council files payday loan bylaw – for now
The task force suggested that the city use the $ 5,000 registration fee to
- ensure lenders comply with city requirements,
- providing alternatives to short-term loans or helping people refinance themselves out of the debt trap
- and educate the community on the problem.
Following Fogle’s presentation, council members expressed interest in seeing a draft order including all of the task force’s recommendations for the public hearing at its March 23 meeting.
Councilor Craig Hosmer said it was time for council to make a decision.
“We have debated this issue, talked about this issue for years now,” he said. “I think we all know something needs to be done.”