Worshiping the Market God in The "You're on Your Own Ship Society"

Chuck Sheketoff

The true believers may have reached a new low in their worship of the market god and pursuit of the "You're on Your Own Ship" Society. Here's how they twist ("spin" would be too kind) an effort to add a small degree of consumer protection to the payday lending spree.

According to the Oregon Republican Party's "ORP UPDATE" for the week of May 30th through June 3rd, "Senate D’s Support Increase in Interest Rates for Payday Loans!"

Apparently, the Oregon GOP wants Oregonians to ignore the fact that before the Senate action there was NO limit on payday loan interest in Oregon. This is the grand way the Republican Party explained their headline:

Democrats in the Senate are supporting a 391% interest rate fir (sic) payday loans. On May 31st Democrats in the Senate decided to attack businesses that provide short-term loans to workers in need who may not make it until their next payday. Senator Roger Beyer (R-Molalla) stated, “We should be letting the market determine these rates, not the legislature.” Business throughout Oregon offer short-term payday loans to help Oregonians with unexpected expenses that come up in between paydays, and SB 545 will these (sic) Oregon workers suffer.

Simultaneously, Representative Dennis Richardson wrote in his weekly newsletter this revisionist history and explanation:

From the Senate Republican Office: Majority Dems Support 391% Interest Rate for Payday Loans

When Democrat Governor Neil Goldschmidt removed interest rate caps to attract businesses to Oregon in 1987, few would have guessed that Senate Democrats would circle 18 years later and set caps at 391% APR. Today, Democrats in the Senate chose to reinstate those caps and attack businesses that provide short-term loans to cash strapped workers until their next payday.

“Those that voted for this measure have brought interest rate caps back to Oregon. Their votes tell us that while 392% is too high, the 391% proposed by this bill is acceptable,” stated Senator Roger Beyer (R-Molalla). “We should be letting the market determine these rates, not the legislature.”

In the past, lenders in Oregon were limited in the interest rates they could charge. The lack of these limits, known as usury, was used by then Governor Neil Goldschmidt to attract a major credit card company to Oregon in the late 1980’s. The passage of Senate Bill 545 reinstates these limits for the payday lending industry.

“This bill sounds good on the surface but has the unintended consequence of creating a state sanctioned 391% interest rate,” stated Senator Jackie Winters (R-Salem). “This bill puts the state seal of approval on this rate and forever enshrines it in statute.”

Businesses throughout the state offer short-term payday loans to help Oregonians with unexpected expenses that come up between paydays. Borrowers are often high risk and traditional lenders are not an option.

And then this week the Right-wing echo chamber and cheerleaders for the worship to the market god, Cascade Policy Institute, issued a statement entitled "Who's Asking for Payday Loan Reform?" (I'd provide a link, but their website, ironically, is not too quick to post their "QuickPoint!" commentaries). They claim,

if customers actually felt threatened by the loan industry, they'd stop doing business with them. In fact, there has been very little demand by payday loan customers for additional regulation because they are, for the most part, satisfied with the status quo. The push for regulation comes from intellectual elites, such as editorial writers, who think they know how to run other people's lives.

After suggesting that the cap on interest rates would lead to "higher prices for services," they argue "Payday lenders are providing an important service. They and their customers should be left alone."

Oregon has more payday loan shops than McDonald's with an economy that has super-sized the payday loan industry. Under the free marketeers' "you're on your own ship" philosophy, the government should stop regulating the food industry with health standard inspections. Ah, let them choose to eat tainted beef...

By Chuck Sheketoff June 07, 2005