Payback is a bitch
Loan sharks have taken over the city. At least that was the feeling one got last week as a Sacramento City Council subcommittee approved an “emergency ordinance” banning new check-cashing and payday loan stores—at least temporarily. The moratorium is scheduled to go before the full council on October 16.
The ban is intended to last until the city can come up with new regulations governing where and how these types of businesses can operate. The measure was introduced by Councilwoman Sandy Sheedy, who is frustrated because two different payday loan outfits are trying to move into the Del Paso Boulevard area, where four already operate.
Payday lenders are often described as “predatory lenders” because they charge exceptionally high interest rates and fees that are often hidden from the borrower. A California Reinvestment Coalition representative told the committee that the stores drain over $12 million from Sacramento neighborhoods each year. And maps compiled by city staff show payday loan stores are clustered along avenues like Fruitridge Road and Stockton Boulevard, where many residents don’t have access to more traditional, less usurious, financial tools.
During the meeting, industry spokespeople filed in to explain that check-cashing businesses are misunderstood and provide “an important source of liquidity in the community.” But Councilwoman Lauren Hammond, who failed in her attempt to tackle predatory lending a few years back, wasn’t having it. She interrupted one company rep with a big smile and a short, sweet dismissal. “I wanted to thank you very much for your testimony today. But I think I’ve got enough propaganda from the industry.”