Payday Loans Invades Politics

Payday Lending Invades National Politics

The recession is far from over and the economy is nowhere near recovery. Everywhere you look everybody seems to be feeling the financial squeeze.

With the increasing number of individuals and households caught in the debt trap all over the United States the issue of getting the economy up and going as well as the proliferation of payday loans has been elevated to a national issue.

It is after all a seeming virus that several working class American families have caught and members of the country's armed forces are no exceptions. Leaders of the military have even begun to consider payday loans as liabilities to national security, members of the Armed Forces found wallowing in indebtedness since they would be unable to properly focus on their duties. Politicians, despite the strong lobby groups backing lending companies and businesses have no other choice but to face the music.

Studies have revealed that borrowers are likely to become trapped in repeated borrowing. The legendary interest rates and penalties, once the loan begins to roll over month after month can reach as much as three hundred percent to even eight hundred percent if compounded annually. This is because payday loans cost $15 to $30 for every $100 borrowed.

Consumer groups and lobbyist have likewise presented surveys and studies in both houses of Congress indicating that the average borrower has six to fifteen loan transactions per year, paying as much as $800 in order to borrow a meager $325.

President Obama and Hilary Rodham Clinton have both denounced the payday loan companies and lenders for their so-called predatory interest rates. They have both declared lenders as their targets along with comprehensive programs for the economy.

President Obama in particular has proposed that the thirty-six percent interest cap for military cash advance loans which was approved in October of last year be expanded to include every single American family availing of payday loans. The president has declared it to be his policy to protect American families from unscrupulous lenders in order to help lower-income and to middle-class American families survive the crisis.

John McCain on the other hand didn't declare an outright war against payday loan companies but has not extolled them as well. On a trip to Ohio, McCain emphasized on the loss of jobs brought about by the continuing attacks on lending firms but vowed to work on getting the economy on track and addressing the issue of joblessness. Republicans have been known to uphold the rights of existing businesses as a party line, including credit companies and lenders. This maybe one more reason why he didn't win.

And so, the clamor for the United States government to outrightly interfere as American families continue to face the economic crisis grows endlessly. Consumer rights advocates and lobby groups are calling for a crack down on predatory lenders.

Will politicians deliver on their policies after they get elected or campaign pronouncements remain to be just pronouncements? The people of the United States are waiting in anticipation, hopefully not in vain.