In the latest episode of government-knows-best, another (nanny) state politician is working hard to take away a choice he thinks we shouldn’t have. After deciding that payday lending is a “deceptive and unconscionable trade practice,” Arkansas Attorney General Dustin McDaniel consulted his paternalist playbook last month and sent letters to 156 payday lenders threatening to sue them out of existence. His announcement on Tuesday that most payday lending companies have caved is bad news for consumers who can’t get a loan but would prefer not to pawn their television or bounce a check.
As an industry group representative explained in a Letter to the Editor this week,
Eliminating payday loans as an option does not eliminate the need for short-term credit. Instead it forces consumers to choose between more expensive alternatives such as fees for bounced checks, overdraft protection, or late bill payments or even unregulated off-shore Internet lenders…
[N]o one is offering real alternatives to payday loans. To date, almost all of the attempts to create payday loan alternatives have either been charity-based, required government subsidies, unavailable to the general public, unprofitable or unsustainable.
With the apparent success of his intimidation tactics, McDaniel joins the list of meddling elitists who couldn’t care less about soaring food prices. And the 500-plus employees of payday loan companies in Arkansas will join 80,000 other Americans at the back of the unemployment line.