Re "California Thrift's Woes Show Challenges Competing with Payday Lenders" (May 9):

Once again, the critics attack short-term lending but fail to offer any sustainable alternative to meet consumer demand.

In deciding to discontinue its One Pac Pal loan, One PacificCoast Bank discovered what regulated lenders already understand — a 36% annual percentage rate cap on short-term credit is not economically sustainable.

This is reaffirmed by academic research from University of California-Davis Professor Victor Stango, who found that, in most instances, credit unions and banks cannot viably provide short-term credit to retail lending consumers, and further, that consumers prefer nonbank cash advances for reasons other than price, such as convenience and the lack of impact on their credit scores.

Consumers benefit from a wide variety of credit options, and short-term lenders already compete with a range of options offered by banks and credit unions: deposit advances, overdraft protection and nonsufficient funds fees are all forms of short-term credit. Compared to these, a cash advance is often the least expensive, most transparent and reliable choice for managing short-term financial challenges.

We welcome increased competition and innovation. Such efforts will only be to consumers' benefit.  But criticism of regulated short-term lenders' business practices by competitors that have failed to develop workable alternatives that appeal to consumers is nothing more than sour grapes. 

Jamie Fulmer is a senior vice president at Advance America in Spartanburg, S.C.