It seems the state government is now getting into the pay-day lending business [1].
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?