(Agencies)
Updated: 2008-03-24 09:30

"Thanks to the (New York state) ban on pay day loans we've been spared large scale problems, but Internet loans have still cost people their homes," Case-Grammatico said.

A national 36 percent cap on pay day loans to members of the military came into effect last October. The cap was proposed by Republican Senator Jim Talent and Democratic Senator Bill Nelson -- citing APR of up to 800 percent as harmful to the battle readiness and morale of the US Armed Forces.

There are now proposals in other states -- including Ohio, Virginia, Arizona and Colorado -- to bring in a 36 percent cap.

And, in Arkansas, attorney general Dustin McDaniel sent a letter to payday lenders on March 18 asking them to shut down or face a lawsuit, saying they have made a "lot of money on the backs of Arkansas consumers, mostly the working poor."

Alan Fisher, executive director of the said up 2 million Californians have pay day loans. There is a proposed 36 percent cap awaiting debate in California's state assembly.

"We expect pay day loans will make the housing crisis worse," said Alan Fisher, executive director of the California Reinvestment Coalition, an umbrella group of housing counseling agencies. California, a state with an estimated 2 million pay day loans, the assembly is set to debate a bill on introducing a 36 percent cap.

"Thanks to the credit crunch and foreclosure crisis, state and federal policy makers are taking a hard look at the policy of credit at any cost," the CRL's King said. "But more needs to be done, fast."

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