Next week, Rep. Jeanne Richardson (D-Memphis) will bring four bills to the Utilities & Banking subcommittee in an effort to reign in the excesses of the Payday loan business.

What are the excesses? 400% interest rate “loans” given to 19 million people per year, 12 million of whom get trapped in a debt cycle.

A couple of days ago we linked to a Harper’s Magazine must-read article about East Tennessee, the “birthplace” of this usurious practice, but their was one obvious piece of info missing – just what is the difference between “legitimate” lenders and the payday loan people?

The Center for Responsible Lending spells it out, “legitimate lenders assess the ability of potential borrowers to repay it. Payday lenders do not.”

In other words, the process behind the business of payday loans is configured purposely as a trap for borrowers. And not just a trap where it’s impossible to pay back the first few months of a loan (when the interest is higher than the principle) or keep up with a balloon payment. The Payday loan process is a trap that keeps the borrower paying what amounts to interest only month after month after month in a yearly cycle that adds up to 400%.

From the CRL:

To obtain a loan, a borrower gives a payday lender a postdated personal check or an authorization for automatic withdrawal from the borrower’s bank account. In return, he receives cash, minus the lender’s fees. For example, with a $350 payday loan, a borrower pays an average fee of about $60 in fees and so gets about $290 in cash.

The lender holds the check or electronic debit authorization for a week or two (usually until the borrower’s next payday). At that time the loan is due in full, but most borrowers cannot afford to pay the loan back and still make it to the next payday.

But if the check is not covered, the borrower accumulates bounced check fees from the bank and the lender, who can pass the check through the borrower’s account repeatedly. Payday lenders have used aggressive collection practices, sometimes threatening criminal charges for writing a bad check even when state law prohibits making such a threat. Under these pressures, most payday borrowers get caught in the debt trap.

To avoid default, they pay another $60 to keep the same loan outstanding, or they pay the full $350 back, but immediately take out another payday loan, with another $60 fee.

In either case, the borrower is paying $60 every two weeks to float a $290 advance – while never paying down the original amount of the principal. The borrower is stuck in a debt trap – paying new fees every two weeks just to keep an existing loan (or multiple loans) outstanding.

The Center is suggesting a 36% cap on annual interest to spring the trap. Here in Tennessee, the birthplace of this awful practice, we are asking only for a 100% cap.

Rep. Richardson’s bills are up next Tuesday, please call the members of the Utilities & Banking subcommittee and ask them to support reigning in the excesses of the Payday loan industry.

Pro-life Tennesseans ended the state Legislative session with an impressive win on a long sought priority: removal of preferential treatment for Planned Parenthood, the state’s largest promoter and provider of abortion services.

By strong majorities of 25-7 in the state Senate and 69-22 in the state House, pro-life legislators in both parties took action to remove language first placed into Tennessee law during the early 1970’s which specifically named abortion provider Planned Parenthood as an officially recognized adjunct to state family planning services.

In addition to removing the clause, pro-life legislators enacted language which mandates that the Tennessee Department of Health give priority and preference to local public health departments in the awarding of family planning funds rather than private, non-profit organizations.

If Fowler and his ilk continue to ignore the good work that Planned Parenthood does to reduce the number of unwanted pregnancies in Tennessee which thereby reducing the number of total abortions, then it’s only a matter of time before they will come after your contraceptives for the same purpose – to further their own myopic agenda.

Oh wait, they already are. Fowler knows that the Title X funds represented in this legislation cannot be used to end pregnancies and he also know that for nearly 40 years, Planned Parenthood in Tennessee has received Title X family planning dollars and have used the money to provide reproductive and sexual health care – including contraception – to over 11,500 men and women in Tennessee who could otherwise not afford it.

Better start stocking up on your prophylactics while you still can.

Watch the heroics of some of Tennessee’s Democratic legislators who tried to stop this “compromise bill” from passing.

Rep. JoAnne Favors (D-Chattanooga):

Rep. Brenda Gilmore (D-Nashville):

Chairman Mike Turner (D-Old Hickory):

Rep. Sherry Jones (D-Nashville):

Rep. Jeanne Richardson (D-Memphis):