Some time back I was sitting at a stop light on my lunch break. While patiently awaiting the opportunity to quell my hunger with a fast-food offering, I began to look around, noticing the storefronts and signs that I might usually buzz by on my habitual morning commute. What caught my attention that day, while not alien to our daily lives, still managed to stun me into awareness.

Within the quarter-mile stretch visible to me at that time stood the signs and frontage of no less than four payday/title loan outlets. No kidding. Four would-be sub-prime lenders were placed within spitting distance of each other. There is apparently enough “demand” to support four of these outlets next door to each other.

When I thought of the way they abuse people at their mercy I was angered. These lenders charge interest rates sometimes over 400 percent on small loans. Quite often a loan of a few hundred dollars will cost the borrower thousands in penalties and interest, and ownership of the very vehicle the loan was secured with.

This out of control practice takes a financially vulnerable population and effectively cripples them. And the question is begged: Does a secured loan really require a 400 percent interest rate?

Some will argue, as one guest columnist did on these very pages recently, that regulating this industry’s ability to harm the public amounts to “paternalism” or “treating like children” those who find themselves in need of such a loan. But where are these arguments when legislators seek (rightly) to protect us from exorbitant payouts in civil cases? Would those resisting title loan regulation also like to take away bankruptcy and debt restructuring protections? After all, we are all grown-ups and are capable of handling our own finances.

Defenders of the industry claim that most of their borrowers are not poor. Yet statistics from the Center for Responsible Lending (and common sense) indicate that the majority of their profits come from repeat borrowers who are unable to repay the loans. These victims are then forced to extend their loans again and again at great expense.

After some research, I learned that Alabama laws regulating payday and car title lenders are amongst the most lenient in the nation. Georgia and 12 other states have outlawed these practices and others have significantly limited the industry’s abilities to prey on those in economic hardship. In 2006 a federal law made it illegal for interest rates greater than 36 percent to be levied on members of our armed services, who apparently had previously been a favorite target of predatory lenders. Meanwhile, Alabama allows payday lenders to run amuck.

While many states have taken steps to protect their taxpayers, it turns out the citizenry of Alabama has been “served” by lawmakers with higher interests. Sen. Lowell Barron, a Democrat from Alabama’s 8th district, was president pro tem of the Alabama Senate from 1999-2006. During his tenure he consistently delayed and then blocked regulation of these lenders. “These lenders,” it turns out, included himself, as he had owned several such outlets and profited from the exploitation of the very citizens he was charged with protecting.

Sen. Barron is not alone in turning a blind eye to the financial abuse of Alabamians. He is simply the most visible in a line of legislators protecting the payday loan industry instead of their constituents. He is also not alone, no doubt, in profiting from this betrayal of trust.

When will Alabama lawmakers stand up in the interest of our citizenry? Is not our state also due some protection from these modern-day loan sharks? How much longer will we allow this pox to exist on our society? I fear the answer is readily apparent. “The least of these” in Alabama will be robbed blind and exploited until we realize what is happening on the byways of our morning commutes.

Eric Law is a resident physician at the Tuscaloosa Family Medicine Residency. Send e-mail to lawtlw@aol.com.

Categories: Huntsville Auto
Tags: car loans, loans, PAYDAY loans, title loans