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Payday loan joints form USA are rushing to Canada
by stephen donahue Tuesday, Apr. 15, 2008 at 2:17 PM

Canadian provinces are setting fee caps that are weaker than those in many US states.

The payday loan industry feeds on economic hardship. It needs people who live on the edge to make a profit. Policy makers in any region that is seeing a surge in the number of payday loan joints locating there ought to be very concerned because this is a sure sign of economic mal-development and an unjust distribution of wealth. Most it seems never are.

It was recently reported in the Toronto Star that US payday loan companies are rushing to Canada as provinces here are setting new regulations that favour the industry. In Manitoba for example a payday loan joint can get up to $17 for each $100 borrowed. Payday loan analysts say that the Manitoba cap is ‘damn generous’ and that it will allow US based lenders to make plenty of profit. The Durham, North Carolina based Center for Responsible Lending is thus predicting ‘explosive growth’ of the payday loan industry in Canada. Pennsylvania based Money Mart is already bragging that they are located in every Canadian city which has a population of 40,000 or more. A walk up Yonge Street in downtown Toronto will reveal many payday loan, cheque cashing and cash advance joints. Indeed a consultant for the payday loan industry says that very soon US based payday loan joints will be, “appearing on main street Canada.”

In Baton Rouge, Louisiana at the intersection of Acadian Thruway and Government Street there used to be over a dozen payday loan establishments! During the 1990s payday loan places were popping up in Louisiana like mushrooms after a wet spell. A populist law maker from Shreveport, Louisiana led a charge to reign in these usurious institutions but ran into strong opposition. Proprietors of payday loan joints claimed that they were struggling businesses. They said that they were hardly getting by. If that was the case then why were they proliferating so strongly? Why, because contrary to their claims they were raking in the dough.

Here in Ontario there is presently no regulation on payday loan fees. The ruling Liberal Party has introduced legislation that would set up a committee to look into the issue. In the mean time however our Ontario main streets will start to look like mid city Baton Rouge, Louisiana, USA. New Democrat (NDP) member of the Ontario legislature Cheri DiNovo has laid out legislation that would cap rates at the equivalent of 35% interest like Quebec has right now. The Liberals have responded by saying that strict regulation of the payday loan industry would, “drive it underground.” What nonsense! So, laws regulating stealing are bad because they just drive robbers underground too.

Regular banks can not be left off the hook in this. Getting credit if you are an immigrant to this country is hard. Credit histories from an immigrant’s country of origin are not considered most of the time. The payday loan joints fill in the gap. Maybe it would be good if policy makers here were to have their credit taken away from them for a year. Then they could see what many thousands have to do to get by.

The regular banks leave the poor standing at their door. Payday loan joints become the bank of the poor. Where can a person go to get their paycheque cashed? To the payday loan joint of course. Here a low wage earner who can not get regular banking can get a cheque cashed for a fee of course. The fees, fees for every service; the poor are constantly paying fees. Policy makers waltz up to a banking machine with their plastic or they go see a financial planner at RBC. They ain’t got a clue. They actually believe it when the payday loan lobby tells them that the payday loan industry helps people. Yea, they help people alright. They help themselves to struggling people’s money.

In the end those who make policy in Ontario will have to ask themselves what they want our cities and towns to look like. Walk up Yonge Street from Dundas to Bloor. Count all the payday loan, cheque cashing and money store joints. Is that a vision for a main street? Is that a vision of economic justice?

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