The cash advance industry is a tremendously profitable business. In the late 1990's, the industry was hardly known, but thanks to a predominantly Republican Congress and state legislators that tend to be business-friendly, these businesses have enjoyed explosive growth in this decade. The number of payday loans stores has grown fivefold in the past six or seven years, and the number of stores in the United States now exceeds the number of major fast food restaurants. You can find these stores on nearly any corner in most cities, but there are few places where you will find them bunched together more than you will near military bases.



It turns out that our men and women in uniform are among the most profitable customers for payday loan stores, and so far, little is being done about it. The reasons are fairly simple ones - military people are relatively poorly paid but see paychecks on a regular basis. They are the ideal customers. They always need money and they always get paid, so the chances of defaulting on loans are smaller than for other sectors of the public. Studies show that members of the military are three times more likely to take out a payday loan than members of the public at large.

California's legislature recently killed a bill that would have attempted to regulate these loans by placing caps on interest rates at 36% per year. The bill failed, partly due to intense lobbying by the lending industry. Thirty six percent per year may seem reasonable; after all, most credit cards charge about half that rate for cash advances. The lending industry claims that it cannot make money at such rates, due to the high default rate on payday loans.

Similar attempts to regulate the high interest loans have failed in other states, such as New Mexico. At the urging of the Pentagon, Congress has discussed a bill that would affect payday loan stores near bases on a national basis, but so far, no action has taken place. This is unfortunate, as soldiers who are overly concerned about their finances at home are not only potentially distracted from their mission at a time when they need to be focused, but also present security risks. Soldiers who have jobs requiring security clearances are regularly screened for possible problems that might leave them susceptible to blackmail, and one of those problems is financial trouble.

It is good to know that the cash advance industry is doing well. Is it really necessary that they earn their record profits at the expense of our men and women in uniform or our national security