Too often ideas for government action are pushed with the excuse that the poor dumb citizens who built this country are in need of protection from their own stupidity.

A fine example of this is the move, backed by many otherwise conservative Republicans and being led by some big government Democrats, to limit the freedom of private lenders to enter into contracts with customers for short term loans. The term PayDay loan has been well demonized by the would be nanny-staters but a payday loan is nothing more than a very short term micro-loan which you’ll never get from banks and the like because their cost structure is so different they can’t afford to make these loans.

“We’re not against the services at all. We’re saying make it fair,” said Dallas City Council member Jerry Allen, testifying in favor of legislation to force payday and car title lenders to operate under rules that apply to banks and credit unions,” reported the Dallas Morning News.

Well Mr. Allen, if they operate under the rules for banks, they too will have a cost structure which is prohibitive of making fast, over the counter, micro-loans to folk who would have a very hard time ever qualifying at a bank.

The Morning News interviewed Mechelle Jackson of Austin who explained that “she used a payday lender to borrow $300 when she needed money during an illness and paid back $325. She said the choice should remain available for borrowers.” She’s right.

Just because some don’t have the discipline to pay off their short-term loan, and then incur huge interest charges, doesn’t mean government needs to step in to be their parent.

Legislators, let the market work. The reason the payday loan industry exists is mainly due to excessive rules and regulations for consumer lending already burdening banks.

Robert Pratt is host of the top-rated Pratt on Texas radio program which can be heard at

© 2011 Pratt on Texas

Pratt on Texas

Robert Pratt has been active in Texas Republican politics since the Reagan re-elect in 1984. He has served as Lubbock County Republican chairman, and in 2006 founded the Pratt on Texas radio network, providing the news and commentary of Texas on both radio and podcast. Learn more at