Lawmakers and public officials in California, Ohio, South Carolina, Missouri, Washington and other states are attempting to crack down on the controversial practice known as payday lending.
On Wednesday the governor of Kentucky Steve Beshear signed into law a 10-year moratorium on new payday lenders in the state.
Payday loans are short term loans or cash advances secured by a post-dated check. The annual interest rate for these loans can be as high as 400 percent - ten times the highest credit card rates. Consumers who renew their loans often end up paying more in fees than they had originally borrowed. Critics say the system is a form of a predatory lending that traps the poor in a cycle of debt.
In the early 1990s, there were fewer than 200 payday lending stores in the country. Today, it is a $40 billion industry with more than 22,000 stores. There are more payday lending stores than McDonalds and Starbucks combined. As more Americans are living paycheck to paycheck, the demand for payday loans is increasing.
We are joined now by two guests who have been following this issue. Journalist Daniel Brook joins us in Philadelphia. His article "Usury Country: Welcome to the Birthplace of Payday Lending" appears in the new issue of Harpers. He is also the author of the book "The Trap: Selling Out to Stay Afloat in Winner-Take-All America."
We are also joined by Ginna Green of the Center For Responsible Lending. The group is releasing a report today that reveals payday lenders are significantly more concentrated in African-American and Latino neighborhoods in California than in white neighborhoods.
Daniel Brook, journalist whose work has appeared in Harper's, the San Francisco Chronicle and the Boston Globe. He is author of "The Trap: Selling Out to Stay Afloat in Winner-Take-All America." His article "Usury Country: Welcome to the Birthplace of Payday Lending" appears in the new issue of Harpers.
Ginna Green, spokesperson for the Center for Responsible Lending.