Quick Take: Rise of the Nanny State

The sanctimonious state-sponsored witch hunt against payday lenders continues apace. On Friday, one of the big fish of the industry, Advance America, Cash Advance Centers (NYSE: AEA), announced that the states of Oregon and Pennsylvania have driven it to distraction -- and more importantly, into unprofitability.

Following in the tracks of fellow legislative moralists in Georgia and the Carolinas, both states have effectively shut Advance America down -- in Oregon, by capping loan rates at a level that prevents Advance America from turning a profit; and in Pennsylvania, by suing the company and forcing it to shut down. As a result, Advance America will pull up stakes in Oregon entirely, shutter roughly one-third of its locations in Pennsylvania, and consider closing the rest in short order.

So say goodbye to usurious loans from payday lenders ($150 plus six points on a $500 loan, in one example). No longer will they charge rates that no solvent borrower in his right mind would ever pay, and prey upon the working poor of Oregon and Pennsylvania. That work can now be done by more respectable outfits like Bank of America (NYSE: BAC), Wachovia (NYSE: WB), Capital One (NYSE: COF) and Lenny the Loan Shark.

For more on the payday lending industry, read:

• Cash America Clicks With Payday Loans
• Payday Lenders Strike Back