Payday loan offices have been sprouting up in strip malls and on street corners across America for years before Wall Street collapsed. In these hard times, more people than ever are using payday loans to keep bill collectors at bay. Quick money (at interest rates of around 500% or more) for people with bad credit has been praised by some as a lifeline for the poor and condemned by others as a money trap exploiting families in crisis. Recently some states have passed laws limiting interest rates, but there is one marketplace that knows no borders -- the Internet.
Recently I have been trying to share stories of how Americans have rung up such an astonishing amount of debt in recent years. For this story, I first staked out a conference on Capitol Hill where online payday lenders and lobbyists honed their arguments to Congress against reform.
I then traveled to a small town near the Virginia-North Carolina border to learn about the experiences of a man who one day googled "bad credit loans" and soon found himself in more trouble than he bargained for.
Illinois Senator Dick Durbin's bill, the Protecting Consumers from Unreasonable Credit Rates Act, has been referred to the Senate Banking Committee where it will be up to the man who seems to be everywhere these days, chairman Chris Dodd (D-Conn.), to schedule a time for the committee to consider the bill. Durbin's proposal would put a national cap on interest rates at 36%. So far Dodd has not indicated when, if ever, he will call a hearing on the bill.