Opinion

Editorial: Tighter regulation needed for online loan industry





New York Times welcomes crackdown on companies like Western Sky Financial, a controversial online lender that's owned by a member of the Cheyenne River Sioux Tribe of South Dakota:
A prominent online lender that has increasingly run into state challenges — Western Sky Financial, owned by a tribal member of the Cheyenne River Sioux — has just announced that it will stop financing loans next month. Fifteen states have banned usurious payday lending to protect workers from the servitude of compound interest fees worthy of loan sharks. In reaction, lenders are now looking for other ways to ply their abusive trade — by conducting business offshore via the Internet or through ties with American Indian groups invoking their sovereign nation status.

Western Sky Financial’s retreat is a significant step forward in the government crackdown on payday lending. The company faces usury law challenges in five states, most recently in New York where Attorney General Eric Schneiderman filed suit this month charging the company with levying interest rates of more than 300 percent in violation of state law that caps interest at 25 percent. New York authorities have ordered 34 other online and American Indian lenders to stop providing online payday loans in the state, prompting American Indian groups to begin lawsuits in the name of their sovereignty.

Get the Story:
Editorial: Cracking Down on Predatory Payday Lenders (The New York Times 8/30)

Related Stories:
Blog: State actions take toll on Indian payday loan industry (8/29)
Western Sky Employees: Fighting for our voices to be heard (8/28)
Indian online lender lays off employees and cuts new loans (8/27)
New York sues online lender operated by Cheyenne River man (08/13)
Center: Indian Country payday lenders face increased scrutiny (8/9)
New York tells Indian Country payday firms to stop business (8/6)