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March 25, 2008Payday Lending Benefits Communities Stricken By Natural Disaster Says Working Study |
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From PR Newswire: Communities affected by natural disasters are more resilient and less likely to face foreclosure, says a working study, "Payday Lenders: Heroes or Villains?" The study assesses the impact of payday lenders in California communities struck by natural disaster between the years of 1996-2005 and finds that "access to finance is welfare improving at whatever cost." Morse found that banks and other forms of credit were no substitute for payday loans, "...banks cannot serve the welfare-enhancing role for individuals in distress that payday lenders serve." "If the existence of payday lending is valuable for those facing personal disaster in a way that other financial institutions cannot provide, then regulators should strive to make access to finance easier and more affordable, not ban it," Morse wrote, "...if payday lending is welfare improving for at least some portion of the population, a move to ban payday lending is ill advised." D. Lynn DeVault, president of the Community Financial Services Association of America (CFSA), said, "We hope that legislators look at this study carefully before considering banning an industry which can make such an important difference for people coping with effects of a natural or even personal disasters. The Community Financial Services Association of America (CFSA) is the only national organization dedicated solely to promoting responsible regulation of the payday advance industry and consumer protections through CFSA's Best Practices. As such, we are committed to working with policymakers, consumer advocates and CFSA member companies to ensure that the payday advance is a safe and viable credit option for consumers.
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