Attorney General Roy Cooper declared victory over payday lenders yesterday. As the N&O points out,
however, borrowers who need the service and have bank accounts will end
up paying even more to banks through overdraft protection.
With payday lenders out of business and the market for short-term
credit growing, retail bankers stand to inherit those highly profitable
transactions.If banks succeed in gaining new business from former payday lending
customers, it probably will come through automatic overdraft protection
programs.These programs are exempt from state usury laws because
federal regulators classify the charges on the loans as fees rather
than interest.
I came late to this issue, but George Leef and Donna Martinez were defending the rights of 170,000 consumers and the lenders 18 months ago.
Willie Green, a Charlotte businessman who owns payday lending stores in other states, deserves the last word:
“It’s a sad day for consumers,” said Green. “Eliminating payday lending
in North Carolina is not going to eliminate payday borrowing. I would
be very careful with patting yourself on the back.”
