Luis Gutierrez, author and sponser of H.R. 1214, wrote an editorial to the New York Times today to defend his bill to regulate payday loans at the federal level. His bill would cap the APR on payday loans, ban rollovers and create mandatory repayment plans.

This was in response to a letter expressing disgust with the bill. The author of that letter suggested that H.R. 1214 didn't go far enough in regulating payday lenders. Gutierrez defended his position by saying, "My bill is not a cure-all for payday lending, but it is a good start to ensuring consumer protections at a time when consumers need them most."

Gutierrez went on to say that his bill would significantly cut into the profits of payday lenders. It must really empower the entreprenuerial spirit in all Americans when the government steps in and kills the profits on any business they disagree with.

While H.R. 1214 is severe, it isn't as bad as the bill that's fit to wipe my butt that Dick Durbin proposed. His bill would essentially ban and prohibit all payday loans completely. I wonder what the banks and credit unions are paying him for it?

The problem with H.R. 1214 is that it is a step in the wrong direction in principle. What right does the government have to tell a business how it can and cannot operate? If one payday lender wants to charge 800% APR and another 400% APR, do we need a law to stop the one charging crazy rates? Isn't that business going to simply go bankrupt by not being competitively priced at all?

But the government is over stepping its bounds in this one. Cutting into an industry's profits just so that it is less expensive for consumers is not a power given to Congress in any Constitution I have read. If payday loan rates are out of control, why are people borrowing them?

No one tells Ferrari to lower their prices to make them more affordable. No one tells the state of California that their homes are too expensive and to cut prices. No one tells gas stations they can only charge a certain amount. Yet its ok for the government to tell payday lenders what they can and cannot charge?

This bill shouldn't only scare payday lenders. Business owners from all industries beware- the government can do anything they want to you, so you better not get on their bad side. I would love for Congress to cite the specific phrase in the constitution that delegates to them the power to regulate any business they feel like.

Let payday loans regulate themselves. Those lenders who are abusive will fall by the wayside.