Southeast European Center for Semiotic Studies

Des Moines Declares A Moratorium On Payday Lenders

Throughout the city a moratorium on payday lenders and pawn shops has been declared by the city council of Des Moines, Iowa. The purpose of it is to restrain new businesses of that type from setting up shop within the city when regulatory legislation is considered. For the next six months in Des Moines, no new payday loan store or pawn shop may open. At the exact same time, the Iowa legislature is considering legal restrictions on payday lenders, and as part of the financial reform bill, the federal government is considering the same thing.

Blaming payday lenders for urban blight

The Des Moines City Council has put a provisional stop to any new payday lenders in order to mull over some potential changes in zoning code along with potential financial regulation changes, as outlined by the Des Moines Register. Payday lenders are said to be the cause, or at least implicated, in urban blight.

New zoning possibilities

Proposed zoning laws are currently being looked at by the Des Moines City Council. Much the needs that already exist for liquor stores and bars in Des Moines, there may be distance requirements between payday lenders and pawn shops. Concerns are being raised that more payday lenders and pawn shops within the area would negatively impact the Des Moines area, especially real estate. This will not be the very first time the urban blight argument has been raised.

A look at the Urban Blight argument

Payday lenders have been accused of being the reason for urban blight, or urban decay. Granted, sometimes there are payday lenders that operate in decaying areas, but it isn't proven whether this is coincidence rather than causality. For instance, urban decay in Detroit has been tied 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 exact same thing happened in other areas well before payday lenders opened their doors -- and evidently, no one has ever heard of the Rust Belt before.