Photo of the Month: February 2015

This month’s photo captures the prevalence and success of payday lenders in low income areas, with economic decay as a backdrop.

Payday lenders have come under increasing scrutiny lately as the Consumer Financial Protection Bureau (CFPB) takes regulatory aim at short term, high interest loans. There have been state-level attempts to curb predatory loans in the past, however these lenders have proven to be quite adept at maneuvering around the law. With interest rates as high as 500%, payday loans can quickly overwhelm many borrowers, trapping them in a cycle of debt that is difficult to escape.

CNBC reports that according to research [PDF] from the Insight Center for Community Economic Development, “The burden of repaying the loans resulted in $774 million in lost consumer spending and 14,000 job losses. Bankruptcies related to payday loans numbered 56,230, taking an additional $169 million out of the economy.” It is still unclear how the CFPB is going to approach this issue, as there is a tight rope to walk between eliminating destructive practices without halting similar loans that act as necessary lines of credit for people in need.



Signage advertising short-term loans stands in front of stores in Birmingham, Alabama, U.S., on Tuesday, Feb. 10, 2015. In Alabama, the sixth-poorest state, with one of the highest concentrations of lenders, advocates are trying to curb payday and title loans, a confrontation that clergy cast as God versus greed. They have been stymied by an industry that metamorphoses to escape regulation, showers lawmakers with donations, packs hearings with lobbyists and has even fought a common database meant to enforce a $500 limit in loans. Photographer: Gary Tramontina/Bloomberg via Getty Images




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