Hildebrand: Fighting Payday Lenders Bigger Deal Than Electing Obama; Video Lottery Next!

Steve Hildebrand helped Barack Obama win the Presidency in 2008. But he tells Kevin Woster that capping interest rates to check predatory lenders in South Dakota is an even more important campaign:

“In my 30 years of political activity I’ve never done anything this important before,” he said.

But wait, that job as an upper-level campaign official for Barack Obama in 2008 was kind of important, wasn’t it?

“I love the president and I think he’s phenomenal,” Hildebrand says. “But in those candidate campaigns you end up putting your faith in the candidate to do it. In this instance, I’m doing it” [Kevin Woster, “The Odd Couple and the Payday Loan Industry,” KELOLand.com, 2015.07.12].

Hildebrand’s partner in this initiative, Pastor Steve Hickey, says the rate-cap ballot measure already has the support of the conservative and Jesus-y South Dakota Family Policy Council and Family Heritage Alliance. Hildebrand thinks the Catholic and Lutheran churches need to get in gear and join the fight against payday lending more openly (hey! the ELCA is working on that!). But they are sufficiently confident about getting enough signatures and votes to succeed in kicking payday lenders out of the state that Hildebrand is already talking about fighting another business that exploits poverty and desperation:

“Video lottery,” he says. “That’s going to be a big part of my future, trying to get this state to get rid of video lottery.”

His buddy the pastor might just help out on that one, too [Woster, 2015.07.12].

Might? Oh, I think Pastor Hickey would be right on board with banning video lottery. But one thing at a time, fellas!

9 Responses to Hildebrand: Fighting Payday Lenders Bigger Deal Than Electing Obama; Video Lottery Next!

  1. Shirley Harrington-Moore

    I am for getting rid of video lottery but unless there is SOMETHING/SOMEONE who will offer loans at 35 or whatever percent, taking away any option for help is unhelpful. Show me who will lend money to the poor who need an emergency loan.

  2. Shirley – charging someone 400%, 600% or even over 1000% effective APR is not an “option for help”, it is preying upon those who lack the financial savvy to understand the debt cycle they get themselves into.

    The reality is, most people would be better off dealing with their emergency with no loan than they would be with one of these payday loans. What happens when they can’t pay the payday loan back? The logical answer from the payday loan companies is to take out yet another loan to pay off the first loan. Nasty cycle of debt… but they make money so who cares right?

    In some cases if the payday loan companies don’t get paid they garnish wages putting the person in a worst position than they were before due to penalties and interest. In other cases if it is a title loan, they just repossess the vehicle which prevents the borrower from getting to school or work. There is little chance of getting the car back after they add in their fees, repossession costs, storage costs etc.

    If people want help – there are traditional financial companies who will offer higher interest loans (still under the 36% cap). There are also credit cards, and while an interest rate of 27% APR seems outrageous to many it is a mere fraction of what payday loan companies offer.

    There are also pawn shops that offer cash when emergencies arise, and although their fees can add up, they are still far less expensive than the payday lenders. Finally there are credit counseling services such as LSS that can help connect low income borrowers with a source of funding for emergencies.

    Keep in mind such caps are already in place in many states, and such caps apply to everyone in the military. Yet we don’t hear about the sky falling due to these millions of Americans not being able to obtain a short term payday loan at 725% APR.

    Time for the predatory lending to stop. We can do better.

  3. Deb Geelsdottir

    Payday lenders are highly skilled at deceptive language when it comes to comparing their loan rates to credit unions, banks, etc. One of my clients who was financially unsophisticated, believed that she was getting a better deal at the payday lender because their interest rate was lower. She didn’t understand the difference between a weekly rate and an APR, and the lender felt no obligation to clarify that. Scummy scammers.

  4. bearcreekbat

    I would like to see an effort to educate folks about the resources that are available to help low income folks in an emergency, such as the local County General Relief programs. These programs have a statutory obligation to help low income folks “whenever they shall stand in need.” SDCL 28-13-1. Although each county may require an applicant to provide some services or promise to repay whatever funds it provides, I found no statutory authorization to charge interest.

    In addition, folks need to be educated about the protection they have against creditor garnishments and against creditors taking their property. We should educate folks about their right to claim real and personal property to be exempt from judicial process, as well as their rights under laws such as the fair Debt Collection Practices Act.

    A real working knowledge of the various statutory rights designed to protect folks in need would go a long ways in helping folks avoid predatory lenders and overbearing creditors.

  5. Shirley Harrington-Moore

    one argument has been that people will turn to online borrowing which can be as bad or worse. The hydra has many heads.

  6. Steve Hickey

    The Dakota Credit Union Association is retooling to meet the needs. Other cities like Dallas have figured out how to offer $1000 at 18% but only one loan. There are other interesting alternatives popping up in places like Pennsylvania, among non-profits and state guaranteed loans. Anything, anything is better than a payday and title loan. Hildebrand and myself frequently advance our employees paycheck a few days at zero percent interest. Other companies need to do this more. And the bottom line is, some people should not be lent money. If you have a fixed $1200 income, you don’t have money to pay back a $500 loan in two weeks. So, people come into Lutheran Social Services with 10-15 loans. They pay off one with the other, the payday lenders get paid and the borrower is buried.

  7. Steve Hickey

    Regarding the online lending point. This is increasing in every state and requires a Federal fix. It is not increasing at a faster rate in the sixteen states that cap the rate at 36%. It’s increasing in all the states.

  8. Agree with Mr. Hickey that online lending needs a federal solution since it often crosses states lines, however until that occurs should we just remain idle and do nothing?

    Shirley that logic escapes me. Surely we need to acknowledge that no law will eliminate all the predatory lending that may exist within the state just as a laws mandating someone needs to be 21 in order to consume alcohol won’t prevent all underage drinking.

    That doesn’t mean we shouldn’t try to improve things or give up, but it may mean the fight isn’t over just because the bell rings at the end of the first round.

  9. Shirley, the payday lenders previewed the argument that banning them pushes people to worse usury options in the Ageton lawsuit over AG Jackley’s ballot measure explanation. Craig says it well: the presence of many heads on the hydra does not dictate that we stop lopping off heads; it means we keep swinging!