The Washington Post published a story this morning saying that Western Sky, a lender specializing in very high interest loans, would cease to fund loans on September 3, 2013. Western Sky is owned by a member of the South River Sioux tribe and operated on that tribe’s reservation in South Dakota. Their website states that they are not a payday lender, however the rates charged are well in excess of the limits set by the usury statutes in many states. For instance, in New Jersey, loans with rates exceeding 30% are voidable and when the interest exceeds 50%, it becomes a criminal matter. Western Sky’s rates were well over 100% APR.
The upshot is that there is now one less participant in a predatory market that focuses on the most financially unstable portion of the population. I have observed that clients who use these types of lenders tend to be on the lower end of financial status and use them in times of sheer desperation. The data can and does get leaked, somehow, to what I sometimes characterize as “boiler room” collection operations, especially when one of my clients files for bankruptcy.
I feel sorry for the people who will be put out of work by this, but the business in which they engaged causes untold harm, in my opinion. There are several states, including New York and Maryland, who have commenced prosecutions and other litigations against these types of lenders. Many are located off-shore and can’t be touched, but at least this one is no longer going to be handing people rope to financially hang themselves.