The taxpayer as a pay-day lender
It seems the state government is now getting into the pay-day lending business.
They are now offering two $500 loans per year to be repaid at an exorbitant 25% interest rate.
The governor’s office claims that this will be the “model” for businesses across the commonwealth. It is the government’s hope that this kind of benefit for employees will keep them from turning to pay-day lenders.
Some quick thoughts on this:
- Is there a rash of state employees going to pay-day lenders. Is it an endemic problem now? If it is, is this an indicator of a larger, more disturbing issue of state pay not keeping up with the standard of living?
- Why is this expenditure coming from the governor’s office and not part of the state budgeting process?
- How can the state justify a 25% interest rate, given the likely loan recipients are cash-strapped?
- Why are taxpayer funds being used for such an expenditure in the first place! Why do we continue to go down the slippery-slope of the government playing banker?
Category: Government
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this is better than a bailout. i am absolutely shocked he didn’t offer that, after all, he is on his way out in a few months & doesn’t care about the Commonwealth anyway.
why wouldn’t I just get another credit card at a lower interest rate?
hey I appreciate the post!
You raise some great points that need to be addressed by our “governor”
[...] wish people could read I was about to respond to a post about the Governor’s plan to provide loans of up to $500 to state employees and then decided [...]
I think this is using money donated by employees. The 25% interest rate is high but payday and car title lenders charge 350%.
Can we get an “I’m sorry?” I guess sometimes you can’t believe what you read in blogs…
1) I based my post off of report in the MSM – so if you would like an apology, please feel free to contact the Richmond Times-Dispatch which wrote: “Virginia is getting into the emergency-loan business”
2) I will gladly correct the record after I have done some research…you all know that I am a big proponent of that sort of thing. I have never failed to ensure the right information is posted.
3) Most of the post still is valid. You are focusing on the narrow taxpayer angle and failing to see that
– this is still government-advocated and government-driven
– it doesn’t correct the problem of employees needing short-term, high-interest loans
– it still fleeces the loan recipient at 25%; yes, it’s still lower than a pay-day loan, but it’s still damn high.
4) It’s always nice to be publicly called out by a friend instead of getting a friendly private email or phone call stating I might want to look closer at this subject.
It’s simply odd to see a Governor who has lambasted the payday loan industry so proudly announce he’s getting into the business.
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