Would you entrust your financial well-being to an industry called fringe banking? That isn’t what they call themselves. They prefer deferred deposit services, more simply, payday lending. Many others, including those who work in finance or economics, call them predatory lenders. Drive up University Avenue from Waterloo toward UNI and you can count at least seven of these businesses, often abutting liquor stores or tobacco outlets.

Waterloo City Councilman Pat Morrissey is working to restrict where payday lenders may operate. According to the Waterloo-Cedar Falls Courier, the proposal would mandate payday lenders not open downtown or in shopping center districts and that they not open within 600 feet of each other, bars or liquor stores. City areas designated as protected uses— schools, churches, public parks and hospitals— would also be forbidden to them.

The ordinance, unanimously approved by the Waterloo Planning, Programming and Zoning Commission, will be presented for consideration at a city council meeting April 14. Currently, two councilmen dissent, saying there is no evidence that payday loans are harmful. Further, they want members of this industry to have a say. Indeed, members of the industry claim they primarily serve middle-income customers who take out the rare loan to cover an emergency.

However, there’s evidence this industry does harm. A 2011 study by the University of California at Irvine called “Investigating the Social Ecology of Payday Lending” found that cash advance businesses are disproportionately located in low income and minority neighborhoods. For loan amounts of $200-$300, one can pay 200 percent to 300 percent interest.

It’s simple economics; someone sees a market with an unmet desire and meets that desire. In this case, the desire comes from people with restricted access to conventional financial institutions who want that access, hence the epithet predatory lending. By 2008, there were more than 22,000 cash advance locations originating $27 billion in loan volume annually. As wages continue to stagnate, fringe banking grows and is moving into working and middle class neighborhoods.

Despite industry claims, The Center for Responsible Lending reports that less than 2 percent of all payday loans went to borrowers who took just one loan. More than 60 percent of loans went people who took 12 or more loans per year and 24 percent to those with 21 or more loans annually. Frequent use of these lenders can lead to a debt trap in which the borrower must continue borrowing just to pay the last loan and still have money to spend.

You may think this has nothing to do with you, but students, a notoriously cash-poor group, are also a target. So far, these businesses are not present near campus. However, they advertise in newspapers and they advertise job positions on the UNI job board. I advise you neither to patronize them for your own good nor work for them for the community’s good. Ames, Des Moines, Clive and West Des Moines have already passed strict ordinances against fringe bankers. It’s time the Cedar Valley joins them.