City Making Poor Excuses

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Are all the payday advance and check-cashing businesses making Baldwin Park look bad? That’s what elected officials there think, and city fathers are taking steps against them.

The San Gabriel Valley town has imposed a moratorium on new payday advance shops, and the mayor was quoted in a Los Angeles Times article likening the businesses to vultures, saying, “We wish they would close up and get out of the city.” He and the other officials believe such businesses reflect badly on the area, making it look poor.

Well, maybe so, but blaming the businesses is confusing the symptom for the cause. The payday advance shops haven’t created the socioeconomic characteristics of Baldwin Park; they merely reflect them. Blaming those shops for making the city look poor would be like blaming Tiffany and Harry Winston for making Beverly Hills look rich.

What’s more, where’s the rationale for calling them “vultures” and assaulting them so publicly? Since I’ve never stepped inside a payday loan shop, I can’t report anything first hand, but there’s no outward appearance that they are doing anything illegal, immoral, seditious or fattening. There are few reported complaints from consumers. In fact, their big sin is that they’re thriving, which implies they have many satisfied customers.

The main complaint seems to be that they charge dearly: $45 for a loan of $255 for a few weeks. That works out to nearly 18 percent for a very short-term loan, but a much higher rate if annualized. But is that really a terrible deal? For the borrower, it may well be cheaper than bouncing a check or missing a payment and living with a tarnished credit record. Also, such a payday loan would be far faster and immensely less hassle than a bank loan. For a borrower in a pinch, that kind of convenience would count for a lot.

But even if the payday loan businesses were offering terrible deals, what business is it for the city to decide that people can’t take it? An $18 drink in West Hollywood is a terrible deal, too, but should elected officials there shake their fingers and tell hipsters they can’t buy them? Adults should be free to make a terrible deal if they want.

Elected officials’ desire to polish their town’s image is completely understandable. But attacking businesses that don’t seem to be doing anything wrong is not exactly an image brightener.

I may be playing to the local crowd, but I’m hoping nothing comes of Boeing’s move last week to try to overturn the Air Force’s big decision the one to buy $40 billion worth of tanker planes from a joint venture between L.A.’s Northrop-Grumman and the European parent of Airbus.

One of the big complaints is that many of the production jobs for Northrop’s tanker plane would be in Europe.

But rather than worry about some jobs, let’s hope the government panel that hears Boeing’s complaint asks this question: Which competitor will deliver the best product at the best price for our military?

The military already answered that question. It liked the Northrop plane, which holds more fuel, carries more cargo and flies greater distances than the Boeing plane.

But if Congress gets involved, unfortunately, the most important aspect will be the number of production jobs in Seattle and Wichita, Kan.


Charles Crumpley is editor of the Business Journal. He can be reached at

[email protected]

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