While self-interest drives all us, the past year has amply demonstrated how excessive greed, unregulated greed, immoral greed can bring down not only a nation's, but the entire global economy.
As the new Obama administration moves to replace blind laissez-faire with reasonable regulations of banking, securities, mortgages, Wall Street, etc., it is time for the Commonwealth of Virginia to attack those purveyors of greed still among us - the payday lenders, the car title lenders, and others who similarly prey on those who are desperate or poorly informed about prudent borrowing.
Last year the General Assembly "regulated" payday lenders with toothless legislation such as limiting loans to $500 and having one loan at a time. Already these predators are bypassing those ineffectual laws by offering open-ended loans that are virtually unregulated and can have interest rates of over 450%. Payday lenders also worked hard to water down truth-in-lending requirements - no sense in telling unsuspecting borrowers about the bottomless pit.
I doubt the payday lending industry will bring an entire economy to its knees in the same way the self-indulgent fools in the mortgage industry did, but there can be no doubt that payday lenders have no moral barometer when it comes to wrecking an individual's personal economy.
Since the payday loan industry is obviously based on excessive and immoral greed, and it cannot and will not regulate itself, now is time for the General Assembly to act. A basic consumer protection demands the state put a 36% cap on interest that may be charged. That is the same rate cap the state has for other types of small loans. It is reasonable. It protects the vulnerable. It is good policy.
Who should the General Assembly protect? The greed merchants or the people?