What to do about payday lenders?

The topic of payday lenders came up twice last week, once in the New York Times and the next day in an urban planner's presentation to Coe's Political Science Club. Payday lenders are those who provide cash to individuals without requiring proof of creditworthiness. They compensate for these high risk loans by charging high levels of interest--171 percent annually, in one case cited by the Times. According to the U.S. Consumer Financial Protection Bureau, the median loan amount was $350, onto which lenders tacked a median amount of $458 in fees. They also have recourse to repossession, of course. Rolling over loans--borrowing more money to pay off the first loan--is common, and lenders rely heavily on repeat business.

Most people who use payday lenders need money for everyday expenses like rent and transportation. Here, for example, is the story of Eboni Maze, a low-wage worker in Wichita, Kansas, told by the New York Times:

[A] single loan — money borrowed against her car, a 2012 Kia, so she could pay her rent — still haunts her more than three years later. Her car was repossessed after she could not keep up with the payments on the loan, which had an interest rate of more than 150 percent. To afford the down payment on another car, she took out a payday loan. When she could not pay that one off, she took out another. 

Given my middle class background, I have never used a payday lender. I did by accident use a check cashing service once. (The activities are closely related, and many payday lenders offer both services.) Traveling in Denver awhile ago, long enough ago that I was carrying travelers' checks, I saw a check cashing operation that seemed like a convenient way to turn a travelers' check into normal money. I don't remember the fee assessed to cash a $100 travelers' check, but it was appalling. I realized immediately I had been taken, and had paid for a little education in life.

Payday lenders thrive because their business model is based on making money when vulnerable people stumble. Interest rates and fees multiply the original cost of the loan. For increasingly popular auto-title loans, one in six borrowers loses their car. Would it be inflammatory to call such lenders exploitative? It certainly amounts to a tax on the poor. Additionally, the presence payday loan shops makes for a depressive vibe in a neighborhood. One business might not make much difference, but once you've got a cloud of payday lenders, pawn shops, discount cigs and booze, and fast food restaurants, you're sending a message that this is not a pleasant place, that no one wants to be here. It's the opposite of impelling form. Repelling form?

Can we regulate payday lenders out of existence? Probably not. They are businesses, after all, represented at state capitals by skilled lobbyists, supported by private equity firms, and aren't doing anything illegal. We could make their activity illegal, of course, but at the risk of writing overbroad legislation that would create difficulties for lenders we like. We could, and perhaps should, limit the amount of interest they can charge, or require a grace period before repossession, but my hunch is that the degree of restriction required to have much beneficial impact would just drive them underground. For here is the conundrum: There is a need for their services. Poor people borrow from payday lenders, not because they're hypnotized, or under any illusion about the risks. They borrow because they desperately need money--they are poor, after all--and they don't have the credit to borrow from a bank. Addressing the problem of payday lenders by somehow forcing them out of existence is unlikely to work. A better approach is to eliminate the need for them... in other words, to deal directly with the conditions of poor people.

As we cast about for this better approach, we run across this interesting fact: Of the 12 payday lenders listed in the Cedar Rapids-Marion phone book, only one is located in the core neighborhoods around downtown. Including pawnbrokers, listed separately but offering the same services...

...still makes it only four out of 16. The others are divided between the areas around Blairs Ferry Road NE, Edgewood Road West, and 7th Avenue in Marion... in other words, what were recently the edges of town, the first or second round of sprawl that have long since been superseded. I don't want to leap to conclusions about this, because I don't know how solid my data collection method is, or how much if any effect zoning has had. But I do know poverty can be found in various parts of the metropolitan area, not just in the oldest neighborhoods. And it stands to reason that the poor who face the most immediately pressing transportation costs would be the ones living on the outskirts.

The clearest solution to any problem involving poverty is economic opportunity. In Michael Dukakis's doomed 1988 presidential campaign, he talked about "good jobs at good wages." I don't think he had any clear ideas how to get those, and I don't think I do either, but dog-gone it, getting America to the point where there are career opportunities for people at a broad variety of skill sets and levels would go far to mitigating this symptom of the no-win situation the poor get stuck in.

Short of that, one thing we can start doing immediately is better urbanism: design cities so that cars are optional. If people could walk to work, school and shopping, that removes a huge set of expenses from their monthly budget. It's like getting a $10,000 a year raise, which equals $5.00 an hour for a person working 40 hours a week. That's without regulating wage increases, or enacting a huge increase in welfare spending. By thus reducing the need for the services of payday lenders, that would go far to easing the blight they cause on the physical and ethical landscapes.

Not to say implementing urbanism will be easy, either. Just that it beats the alternatives, the extremes of either heavy-handed regulation or wishin'-and-hopin'.

SOURCES

Ben Kaplan, "This Week's #Urbanist Goodreads Have the Motor Revving," We Create Here, 13 February 2015, http://www.wecreatehere.net/2015/02/13/weeks-urbanist-goodreads-motor-revving/

Jessica Silver-Greenberg and Michael Corkery, "Rise in Loans Linked to Cars Is Hurting Poor," New York Times, 25 December 2014, http://dealbook.nytimes.com/2014/12/25/dipping-into-auto-equity-devastates-many-borrowers/?_r=1&utm_content=buffere6ae3&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Jessica Silver-Greenberg, "Consumer Protection Agency Seeks Limits on Payday Lenders," New York Times, 9 February 2015, A1, http://dealbook.nytimes.com/2015/02/08/consumer-protection-agency-seeks-limits-on-payday-lenders/

Talking about Walking (II)

Google Street View of Nesmith's childhood street crossing

I've been a pedestrian for a long time. When I was 5, I learned in kindergarten that one should "Cross [streets] only at corners." Since we lived on a corner, and being by quirk of personality an assiduous rule-follower, I assiduously followed that rule. Then, when I was in 1st grade, my family moved to a new house on a different street. Now our house was in the middle of a very long (nearly a quarter of a mile) block. It was over a tenth of a mile to the nearest corner, and another tenth back to where most of my playmates lived. I quickly decided that there was going to be no living with that rule, and jettisoned it.

Recently, New York Times health columnist Jane E. Brody ran a two-part series on pedestrians, which got me thinking about my own habits. As I walk to and from work, or downtown, or anyplace else, I realize that my paramount consideration is: Avoid cars wherever possible. That means never crossing an intersection in front of a car if there's an alternative, even if I have the right of way. After all, the driver might not stop, and then where would I be? And if I see an opportunity to cross a street mid-block, because no cars are coming in either direction, I do it. There is even an advantage to crossing mid-block--a fact also noted by Ms. Brody, "Although I know it's wrong"--namely that cars can appear from only two places: down the street on your right, and down the street on your left. Crossing at an intersection, you potentially have to deal with turning traffic as well, which doubles the number of directions from which cars might be coming. She also crosses against a red light if there are no cars on the street she's crossing.... yup, I do that, too, again because waiting for a green light can often mean dealing with turning traffic from several directions.

Intersection with crosswalks; swiped from U.S. Federal Highway Adm site

Ms. Brody is 73, and writes from the perspective of older walkers. She recommends reflective clothing, paying attention to the time countdown on crossing signals, and most of all a high level of caution as you watch out for cars. I nearly became a traffic statistic one night in late October as I crossed a Brooklyn street with the walk sign clearly in my favor. An overly aggressive driver gunned the accelerator to turn left ahead of coming traffic and came so close to hitting me that I could pound on the hood of his car. What do you think, reader? Do you think she verified through empirical testing whether she was close enough to pound on the hood? I'd like to think so, if only because I did pound on a car after jumping out of its path as I crossed Cedar Rapids's infamous 1st Avenue. I'd feel less of a hothead if other people were also doing it.

Even bicycles, pedestrians' political allies in the quest for complete streets and walkable cities, are sources of danger. Many on bikes, she observes, ride as if being chased by a mad dog.... [T]he reflexes of an older person may not be quick enough to avert a run-in. Duly noted.

In her second column she discusses a number of ways that streets could be designed to favor pedestrian safety. Most of these will be familiar to anyone who's read about walkable cities: pedestrian push buttons, street trees, traffic calming, and such. One of her comments that caught my eye recommended traffic lights: Traffic lights at popular street crossings are a lot safer than stop signs, which in turn are safer than hatched lines on the street to indicate a pedestrian crosswalk. This is interesting because Cedar Rapids, under the guidance of the prophet Jeff Speck, is replacing a number of its traffic lights downtown with four-way stops. There probably are some principles at work distinguishing which intersections get which traffic controls, but when walking I'd much rather cross with a light than at a four-way stop. Even as a relatively fit 55-year-old, I can't make it across two lanes--much less four--before it's the cross-traffic's turn to go.

An important threshold for both bicyclists and pedestrians is the presence of enough of either that drivers not only notice them, but come to anticipate their presence. That's evident in the downtown areas of major cities. We're far from that in Cedar Rapids, but who knows what another generation will bring?

There's no defense against snow and ice, but a more compact city design might make managing them for pedestrian use more possible. Cedar Rapids crews did heroic work to clear the streets within hours of a major snowfall February 1, but plowed drifts still blocked sidewalks six days later.

Pardon the terrible photograph, but can you see the elderly gentleman trying to negotiate the drift with his cane?

When the parking lot is plowed, where does the snow go?

Unplowed walks are pounded into slush by walkers. When the slush re-freezes it is not only slippery but is looking for ankles to turn.

To transform our streets from exclusively auto-oriented design to routes that are safe to walk even for the elderly and the very young will be a long process. But, speaking as someone who aspires to be elderly some day, well worth the effort.

EARLIER POST: "Talking about Walking," 4 November 2013, http://brucefnesmith.blogspot.com/2013/11/talking-about-walking.html

OTHER SOURCES

Dave Alden, "Intro to Urbanism, Part Eight: Retasking Streets," Where Do We Go From Here?, 28 January 2015, http://northbaydesignkit.blogspot.com/2015/01/intro-to-urbanism-part-eight-retasking.html

Jane E. Brody,"Where Feet and Wheels Meet," New York Times, 6 January 2015, D6

Jane E. Brody, "Varied Routes to Safer Streets," New York Times, 13 January 2013, D5

Angie Schmitt, "Poll: The Hunt for the Worst Intersection in America Continues," Streetsblog USA, 31 January 2013, http://usa.streetsblog.org/2013/01/31/poll-the-hunt-for-the-worst-intersection-in-america-continues/

Jeff Speck, Walkable City: How Downtown Can Save America, One Step at a Time (New York: Farrar, Straus, Giroux, 2011)

Blizzards get you thinking

The view from my front door

Iowa got its first major storm of the year this weekend--nothing like what hit New England and upstate New York last week, but enough to impact life. Area grocery stores experienced heavy business Saturday as people prepared for the worst, which of course did not happen. What did happen was all-afternoon rain Saturday gradually changed to snow during the evening, so of course the bottom layer was ice, with slush on top of that. After several hours' pause, the snow resumed, dry and powdery this round, and continued all through Sunday. The current total is 11 inches.

Hy-Vee, Coralville IA
Photo by Dave Wilson; swiped from Facebook page of Mark Carlson KCRG

City snowplows have been at work all day clearing roads. Most area churches canceled services, and most people seemed to hunker down for a quiet day. Football fans, once they had cleared their walks, could give their attention to the Super Bowl pre-game coverage. Had this occurred on a weekday, the plows would probably have started earlier and used bigger crews. (I'm guessing the city has to pay overtime on weekends, though I don't know that for sure.) Schools would certainly be closed--it doesn't take nearly this much to trigger that around here--but some people would have gone to work. Maybe there would have been more auto accidents?

Days like today remind a person of how metropolitan sprawl makes every day a gamble. Of course, we're not going to have a blizzard every day, but in this climate we average a few per year, so they're hardly unexpected. Sprawl works if the weather's fine, AND the roads are unobstructed, AND gasoline is cheap, AND there's plenty of parking at every destination, AND you are willing to overlook the costs in infrastructure construction and maintenance, social cohesion, loss of green space, personal money and time spent in cars, vehicular and pedestrian traffic fatalities, and lack of exercise. Add in a blizzard, and all of a sudden nothing is accessible: the miles to work, school, church, and groceries are fraught with snow piles and icy patches.

So as I rest from my shoveling labors--and try to think of anything rather than confront the reality I'll need to go back out there in a while and do it again--some questions occur to me, along with some tentative and personally unsatisfying answers.

(1) Why are we still building sprawl? Cedar Rapids is cheering the state's gift (with mostly federal money) of a highway extension around the west edge of the city. We are upset with the state's unwillingness to pop for two more interchanges, and are going to spend $5 million of our money to build them ourselves, but with the anticipation the state will soon come to its senses and pony up. We anticipate commercial development, as well as a population increase of 30,000, and all the tax base that accompanies them. We aren't anticipating the additional infrastructure will pile additional burdens on the city budget and city workers, because we believe that the expansion will pay for itself. (But see the Strong Towns booklet, Curbside Chat, especially chapter 3, "The Growth Ponzi Scheme.") The stories we tell ourselves: [a] City streets would be in better shape if the government wasn't so inefficient. [b] We'd have enough money for street and highway repair if we didn't waste so much on <choose one: the military, administrative expenses, welfare, bike lanes>.

In their first "Politics Wednesday" show of the year (7 January 2015), Iowa Public Radio host Ben Kieffer invited listeners to list their goals for government in six words or less. The first response was: Cut my taxes, fix my roads. I'd like to think the listener was being ironic, but that may be hoping too much.

(2) Can downtown develop/be developed by a resilient transportation system? In Cedar Rapids in 2015 the vast majority of people get downtown by car. Some take our dogged but limited bus system. A few, like me--I live just under two miles away--can walk or bike, but that's not practical for most people or (blizzard tie-in) every weather. If we anticipate the number of people working and living downtown to increase, does that mean we need more auto parking? Jon Rouse of Park Cedar Rapids thinks not, at least for the next three years, but admits most people "want to see the front door" of their destination when they park (Chelsea Keenan, "Seeing Spots," Cedar Rapids Gazette, 1 February 2015, 1D, 2D). The trade-off between the number of parking spaces and downtown vitality (social as well as economic) is not as widely-known as it should be. And for now, driving is the only practical way to get downtown for people who don't already live there or are close by.

Speaking of transportation...

(3) How should I be rooting on the federal transportation bill? There is some uncertainty whether Washington can get its act together to pass an appropriations bill to fund the U.S. Department of Transportation, most of which is funneled through state departments of transportation to build and maintain highways. If the federal government is the founder of this ridiculous feast, maybe if they cut off the allowance states and localities will be forced to be rational? That's the Strong Towns argument anyway. Or maybe a state that funds tax incentives for business relocations and considers infrastructure exclusively in terms of highways and maybe airports, and a city that is spending $10.5 million of taxpayer money to remodel a mall on the edge of town, aren't in the business of acting rationally? Local governments are also vulnerable to manipulation by the powerful and well-connected. It would be at least interesting, because at least local choices would be clearer.

from Bernie Sanders Facebook page

Meanwhile, Senator Bernie Sanders (I-Vermont), who may be running for President, is promoting his own $1 trillion bill (see above) to fund infrastructure as a public works jobs bill, which is a dangerous way to think about the issue. Public works are notoriously inefficient means of creating jobs, and should only be used in extreme economic emergencies. We should fund transportation (or not) in the way that brings the greatest public benefit, and support employment by wise economic policies (which in most times means monetary policies).

(4) How should we consider climate change in planning? The Senate recently voted that the climate was changing, with only Senator Wicker of Mississippi in opposition. There remains disagreement as to whether humans' burning tons of carbon per person per year could have anything significant to do with it. Given that scientific research has moved past this question, perhaps it's time for government officials to do so as well. But in the meantime, one likely result of climate change is more severe weather events. Shouldn't resilience to severe weather be a factor in city planning? Why are we still building out like it's 1949?

(5) Why is the clearing of public sidewalks the responsibility of the homeowner, even though the clearing of public streets is undertaken by the government? This is hardly a burning issue of our common life, but my colleague Lynda Barrow--who owns a home on a pie-shaped lot with an extraordinarily long sidewalk--asked me and I didn't know.

I'll continue to ponder these questions as I head back out to shovel the rest of the snow. As the latest "snowmageddon" reminds us the development patterns of the last two generations are unsustainable, these questions are worth pondering. Let me know what you come up with.

As a reward for reading this far, here are two brilliant short videos by Gracen Johnson, one celebrating snow days and one assessing the advantages and disadvantages of walking in a snowstorm.

For analysis of President Obama's budget proposal for transportation, see Angie Schmitt, "Obama's New Transportation Budget: The Good, the Bad, and the Ugly," Streetsblog USA, 2 February 2015, http://usa.streetsblog.org/2015/02/02/obamas-new-transportation-budget-the-good-the-bad-and-the-ugly/