Some Republican lawmakers in Montgomery are locking arms with the Southern Poverty Law Center (“SPLC”), one of the most liberal and militantly anti-traditional values groups in the world, to do what is “right and just” in the eyes of the SPLC. The SPLC is the same liberal group that opposed former Alabama Senator Jeff Sessions’ nomination to be U.S. Attorney General because of what they claimed were his “extensive ties to both anti-immigrant and anti-Muslim extremist groups.” On the SPLC website today is the following quote:
- “The GOP has become America’s white-nationalist party, as racists once confined to fringes take charge.”
The simple fact that the SPLC is so out of the mainstream on so many issues should be enough for Republicans to be wary of any SPLC initiative, but that doesn’t appear to be the case in Montgomery this session.
The SPLC and their allies in the Alabama legislature have proposed legislation to “fix” a sector of Alabama’s financial services economy dealing with small loans, a part of which is commonly known as the check cashing industry. Yes, the same check cashing industry that we have all been led to think poorly of, and, frankly, we don’t know why. We have heard how the industry preys on the poor, and that the interest rates are so high that bondage ensues and there is no getting out.
I felt the same way a few years back, and even sponsored legislation concerning the issue. My uninformed “feelings” led me to want to “do the right thing” even though it seemed to violate my core belief in limited government. I began to look at the facts regarding the issue and, as with any issue, I weighed both sides of the argument. Rational thought and observation began to weigh more heavily than the “do good” feelings, and I came to the conclusion that the industry was actually providing a needed service to thousands of Alabamians. Since then, additional safeguards have been put into place and they’ve been successful. It’s easy for legislators to fall into the “do-gooder” trap and unknowingly pave certain roads with good intentions. This column is a warning not a tongue lashing. It’s a reminder for Republicans to stick to their core values of free-markets and personal responsibility – not the “nanny-state” policies advanced by Barack Obama and his liberal cohorts.
Three quick thoughts/questions that changed my view on small short term loans or check cashing:
- 1. If you had no family to help and no savings, and the water pump went out on your car, how would you get the money to fix it before you got paid on Friday? Remember: You cannot get to work without a car.
2. What is the annual “interest rate” on that two dollar check at the convenience store that bounced (sorry, was “returned”) because your big checks went through first and you didn’t watch closely enough? Or what is the interest rate on the late payment on any other bill?
3. If check cashing is a $700 million a year business and people are being abused, shouldn’t or wouldn’t you and I, or someone, start a business and offer better deals on interest and fees and make a fortune at the same time?
Three quick answers:
- 1. There really aren’t many other places for people to go. Banks don’t do walk in and walk out small loans for people with no credit. If you are poor and have no help, you are pretty much out of luck. The moral high ground cannot be leaving people without a way to help themselves.
2. There are always fees on financial transactions. Many times it is very high like $30 for that $2 check. What is that percentage? 1500% and you still owe the $2. Everything costs money to borrow or buy. It is unavoidable.
3. The free market will fill that void IF it is doable or feasible. The fees in the industry represent reality, but the industry serves a need. Without a legal industry, maybe we can return to the good ol’ days of loan sharks and “back alley lending”. The idea has been floated to some of the activists to “do good” and step into that market and compete, but so far no one has decided it is worth their time or money.
The SPLC has tens, if not hundreds, of millions of dollars that were donated to them to defend the poor. They should get in the game and put their money where their mouth is and defend the poor by providing accessible small loans at a rate that the Southern Poverty Law Center thinks is just and fair. That would be a private sector entity fixing a problem it believes exists instead of the government doing their bidding for them.
Nationally, Donald Trump is trying to roll back financial services regulations and some Alabama Republicans are trying to add new and unnecessary ones that will actually make life harder for Alabama’s working poor. Alabama Republicans should stick with limited government, personal responsibility, and the free market, and avoid legislation that inadvertently hurts the poor on behalf of the SPLC.
Seems like a win-win to me.
Scott Beason can be heard on Superstation 101.1 WYDE Monday – Friday, 9am to 11am.
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