The Poor Don't Need This 'Help'

Tuesday, May 1, 2007

Linda Singer, the District's attorney general, needs a quick lesson in economics as evidenced by her plan to help poor people ["Targeting Businesses Targeting the Poor," Metro, April 26].

The high interest rates of payday loans, subprime mortgages, tax-refund-anticipation loans and international money wires are not arbitrarily set to shake money out of the pockets of the poor. Rather, high rates reflect the fact that the loans are both short term and risky. Businesses need to charge these rates because of the high level of risk associated with the loans.

Limiting the interest rates that can be charged would only reduce the availability of such loans to poor people, the vast majority of whom, by the way, repay their loans on time. But of course, as the attorney general's office would have you believe, poor people don't know what's best for them.



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