The payday loan industry accounts for a $10 billion chunk of the U.S. economy – in contrast, banks and credit card companies rack up over $30 million in late fees and overdraft charges. Those entities saw their profits trimmed by the federal government’s increased regulations under the current administration, but they certainly weren’t hounded out of business the way payday lenders have been.
To the contrary, the banks that covered themselves in mud in the housing market were given taxpayer bailouts to the tune of almost a trillion dollars – money that the American people don’t exactly have right now, so we had to borrow it from China. In states where they have been regulated out of business (like Arizona), payday lenders have turned to Native American tribes as a platform from which to provide short-term loans to working people.
Due to the legal principle of sovereign immunity, tribes are considered separate nations within the United States. Businesses that function from within tribal lands are not subject to the laws of the state in which the tribe is geographically located, but moreover, companies that file their articles of incorporation can operate outside the boundaries of the reservation. Reservation-based lenders are also exempt from lawsuits and the like.
However one feels about online payday loans – those who have taken them out and repaid them responsibly don’t seem to have a problem with them – one cannot deny that a market exists for them, otherwise short-term lenders wouldn’t be pulling down $10 billion a year. If they can avoid the regulation-based death penalties that many states have sought to impose by operating from Native American soil, they can continue to meet the demands of the public.
