A recent installation of The Word on The Colbert Report brought to my attention the flaws in a bill posing as much needed regulation for payday lending. The loans are borrowed against the borrower’s next paycheck and are supposed to help with emergencies for those that don’t qualify for bank loans. The problem is that payday loans can have interest rates as high as 800%. They often put the borrower who needed help in a cycle of long-term debt. Of the 19 million Americans who have taken out these loans, about 12 million are in a repeat cycle, taking out additional loans to pay off the old ones.

The payday industry opposes the bill, but it doesn’t go nearly far enough. Colbert points out a possible reason Gutierrez, who once opposed the entire practice of payday loans, introduced such a weak bill. Turns out a payday lending group, QC Holdings, is his biggest contributor and another, Online Lenders Alliance, is a large contributor. Boom, roasted! Another reason for his change is that the industry increased their lobbying efforts.

The video and the articles I have read cannot seem to find agreement on what exactly the bill does. This much is clear: Out of all numbers I have seen, the lowest annual rate on the loans will be at least 391%. It is also full of loopholes that would lead to no change.

The Senate does have its own plans for dealing with the problem. A bill sponsored by Sen. Richard Durbin (D-IL) and Rep. Jackie Speier (D-CA) would cap the annual interest rate at 36%. This could kill the industry, though for some reason, Gutierrez thinks that is impossible. Or maybe he just hopes it is.

Enjoy baseball’s inevitable return to normalcy, when Royal’s fans hopes die, Chris Duncan for MVP signs can be burned, and the Red Sox take over the East.

Adam Feser