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Des Moines Declares A Moratorium On Payday Lenders


The city council of Des Moines, Iowa, has declared a moratorium on payday lenders and pawn shops throughout the city. The intention is to put a stop to any new businesses of that type setting up shop in the city when regulatory legislation is considered. For the next six months, new payday loan stores and pawn shops cannot open in Des Moines. Meanwhile, the Iowa legislature is considering legal restrictions on payday lenders, and also the federal government is considering the exact same thing as part of the financial reform bill.

Blaming payday lenders for urban blight

The Des Moines City Council has put a temporary halt to any new payday lenders, according to the Des Moines Register, to mull over some potential changes in zoning code along with potential financial regulation changes. It has been alleged that payday lenders are a cause, or at least implicated, in urban blight.

Potential new zoning

Des Moines City Council is looking into proposed zoning laws. There may possibly be a distance requirement between payday lenders and pawn shops, just like those that already exist for bars and liquor stores in Des Moines. There are concerns that a lot more payday lenders and pawn shops in the area would leave a negative impact on Des Moines, especially real estate. The urban blight argument has been summoned for deliberation before.

A look at the Urban Blight argument

Many have made allegations claiming payday lenders are the cause of urban blight, or urban decay. Of course sometimes you will find payday lenders that do business in decaying areas, but it's not proven whether this can be a mere coincidence instead of causality. For instance, urban decay in Detroit has been connected to the decline of the auto manufacturing industry. Jobs moving away from manufacturing plants and resulting urban decay, was going on well before payday lenders showed up. The same thing happened in other areas way before payday lenders opened their doors -- apparently, not one person had ever heard of the Rust Belt before.