|A Constitutional Issue?|
I suppose the effort has come as an electoral "counter-offer" to South Dakota voters who will also be voting on another payday lending issue--Initiated Measure 21--that will absolutely cap payday lending rates at 36% if passed. Muddy as the waters have gotten on this thing, informed voters really need to concentrate on the issue in order to understand what's happening. IM 21 is an assault on the payday lending industry, probably crippling it for good because the business can't make a go of it by loaning money at 36%. Even though I oppose IM 21 on free-market, libertarian grounds, I respect the supporters of it because they want to curb what they consider to be abusive lending practices that snare a lot of financially hurting South Dakotans into an endless cycle of rolling over payday loans.
Those "rollovers" compound debt upon debt, often driving up real interests rates into triple-digit amounts. The payday lenders make their money by perpetuating that cycle, which would be ended if IM 21 passes. I think IM 21 has a real chance at succeeding, and I'm sure the industry it targets feels the same way. No doubt this has been the driver for supporters of Constitutional Amendment U, which headlines itself as a constitutionally fixed limitation on all lending at 18%. On that score it seems even harsher than IM 21's limitation of 36%, but Amendment U's 18% limit is nullified if lenders and borrowers agree to higher rates.
First off, I don't get how any voters would want something like this in South Dakota's Constitution, which is a place where fundamental principles about governance reside. The idea
Sort It Out, We Must
Backers of Constitutional Amendment U must think that voters are dumb enough to believe they're setting a limit on interest rates by passing this laughably transparent device intended to keep the payday lending industry afloat in perpetuity. I can live with the idea of payday lending, but I'm no less disgusted by the crassness and cynicism of this measure.