The state Legislature of Virginia has been trying to crack down on payday loans. They came up with a system that was a compromise to keep payday lenders in business yet put more restrictions on them.

But some payday lenders, at the moment the new system was put into place, left the payday loan business. They began offering revolving lines of credit, which is similar to payday loans, but not the same thing.

Now the state Legislature is close to passing a bill that would require lenders to choose payday loans or revolving credit. It may sound harmless, but their is potential for harm in this.

First of all, payday loans have gotten new restrictions placed on them in the state. Borrowers have to be put into a state wide data base, loans are limited to a certain number per year, etc. The reason lenders switched to revolving credit was to avoid the restrictions.

The only problem is that when many of them choose to ditch payday loans and stick to only this revolving credit, they will find that by the end of the year they will be regulated out of business. By then it will be tough to come back to payday loans as those who weathered the storm will enjoy most of the payday loan business.

This is just another example of how government doesn't need to get involved in the industry of payday loans. They are forcing business to change and adjust in order to adapt and survive. Is hurting business the right thing to do in economic times such as these?

The governmetn would do best to let payday loans regulate themselves. Competition drives fees and rates down. In such an environment, only the friendly, non-predatory lenders will survive. The government doesn't need to do for the industry what they would do themselves. Payday loans do not need to come under so many laws and restrictions.