Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

npr.org

Post reply on HN
Print view View original

41–50 of 305 posts

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#41

Post by njarboe »

andrewla wrote: post #22
dawhizkid wrote: post #5

Isn't the problem less about predatory payday loans and more an existential issue around the fact that so many people can't afford to simply live ? People take these bad loans because they literally have no other choice. They are using these loans to buy groceries and cover bills, not splurge on non-essentials.

I saw a tweet [1] that followed a thread on the concept that paydays are not really a requirement any more -- it is totally possible with our existing banking infrastructure to pay salaries on a more continuous basis, but we've built up a huge amount of institutional momentum around the idea that running payroll is a complex and laborious process that we want to infrequently. By parallel in software engineering, bran…

You would have to have people's rent, mortgages, car loans, etc do the same or else people will not have enough money to pay them. The rent due at the beginning of the month right when people get a pay check is a very good idea to prevent defaults.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#42

Post by skh »

If we amended the Constitution of the United States to state that only corporations count as people then our politicians would no longer be lying when they say they support the people. We would finally be living in a country in which the peoples' will is done and be a country in which the peoples' voice was regularly heard.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#43

Post by jdavis703 »

dawhizkid wrote: post #29

Is getting paid daily vs biweekly actually the antidote to payday lending? There's a few Silicon Valley cos that enable this and they seem to have become really popular. Could it really be that simple?

No. I have family who have/had payday loans. From my personal experience they're taken up because an emergency happens, not because the money ran out 2 days before payday. A daily payday drip might make sense for some consumers, but what's really needed are accounts that start to build up an automatic emergency fund, and perhaps also look at past banking history to quickly give an emergency loan that is automatically repaid when the next direct deposit hits.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#44

Post by ACow_Adonis »

andrewla wrote: post #22
dawhizkid wrote: post #5

Isn't the problem less about predatory payday loans and more an existential issue around the fact that so many people can't afford to simply live ? People take these bad loans because they literally have no other choice. They are using these loans to buy groceries and cover bills, not splurge on non-essentials.

I saw a tweet [1] that followed a thread on the concept that paydays are not really a requirement any more -- it is totally possible with our existing banking infrastructure to pay salaries on a more continuous basis, but we've built up a huge amount of institutional momentum around the idea that running payroll is a complex and laborious process that we want to infrequently. By parallel in software engineering, bran…

Forgive me for lol'ing, but the LAST thing i'd want to see is payroll done like most software places do version control.

I've tried to teach teams of analysts version control, the xkcd panel is a documentary, not a joke.

https://xkcd.com/1597/

Also, its 'totally possible' only in the sense that it really isn't: i.e. if like many tech people you ignore actual social, infrastructure, law and cultural issues and start blaming the users for why they don't use your brilliant tech product/live their lives like they're supposed to, or talk glibly about things you don't understand.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#45

Post by WhompingWindows »

dawhizkid wrote: post #5

Isn't the problem less about predatory payday loans and more an existential issue around the fact that so many people can't afford to simply live ? People take these bad loans because they literally have no other choice. They are using these loans to buy groceries and cover bills, not splurge on non-essentials.

Why can they not afford to live? Payday loans may be a factor in some instances. Better to have a small piece of policy that does some good than no policy at all. Keep in mind Obama was limited by the GOP congress from 2011-2017, he couldn't have necessarily gotten larger steps through legislation. It's commonplace for modern presidents to try to fulfill their agenda via executive branches, as the other branches are often independent or adversarial.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#46

Post by elipsey »

param wrote: post #7

Here is the best argument in favor of the change: >> if the rule had kicked in, some two-thirds of borrowers wouldn't qualify for a payday loan If the above is true (and not fake news), I would like to understand how the industry was expected to survive with 2/3rd of its customer base taken away in an instant; and what alternative services these customers would have been routed to...

What do you think "fake news" means, and how would this statement qualify?

"[...]the official, who spoke to journalists on condition of anonymity, said that if the rule had kicked in, some two-thirds of borrowers wouldn't qualify for a payday loan."

Unless you want to insinuate that NPR completely fabricated this story to drive engagement, you should probably just say "incorrect" or something like that.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#47

Post by deckar01 »

i_am_proteus wrote: post #23

I'm of the mind that many of these lenders are indeed predatory, but prohibiting loans to high-risk borrowers at realistic rates (based on the risk) just leaves them unbanked rather than poorly-banked.

> Most borrowers use payday loans to cover ordinary living expenses over the course of months ... 69 percent used it to cover a recurring expense, such as utilities, credit card bills, rent or mortgage payments, or food;

https://www.pewtrusts.org/en/research-and-analysis/reports/2...

Pay day loans are primarily used as a way to prolong an unsustainable lifestyle. That is not banking. That is selling people a fantasy and helping them dig themselves deeper into a hole of debt.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#48

Post by lifeisstillgood »

So regarding the idea of charging high rates to compensate for the extra risk

Looking at the St Louis Fed (I assume a good source of data) [https://fred.stlouisfed.org/categories/32440] credit card defaults average around 5% and mortgage defaults at 2.5% (handwaving 2008 recession)

So ... even with my bad maths ... if I am going to get 95% of all my loans back, I need to charge the 95% and extra 5.25% to break even

To avoid the unbanked problem, that's moving average 25% credit card rate to 27.5%.

It does not seem to me that 'the unbanked are too risky" is really an issue.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#49

Post by dlp211 »

kevin_thibedeau wrote: post #33
dawhizkid wrote: post #5

Isn't the problem less about predatory payday loans and more an existential issue around the fact that so many people can't afford to simply live ? People take these bad loans because they literally have no other choice. They are using these loans to buy groceries and cover bills, not splurge on non-essentials.

How many struggling people are spending $200+ monthly for overpriced cell and cable service?

Cell phones are a necessity and cable provides enormous entertainment value for the money.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#50

Post by srmatto »

dawhizkid wrote: post #5

Isn't the problem less about predatory payday loans and more an existential issue around the fact that so many people can't afford to simply live ? People take these bad loans because they literally have no other choice. They are using these loans to buy groceries and cover bills, not splurge on non-essentials.

My understanding is that in a lot of cases its that some emergency spending event sets these people back and there is almost no way for them to recover from that.

In NYC Neighborhood Trust helped to develop this app in an effort to serve these people and help them avoid that type of circumstance.

http://finlab.cfsinnovation.com/challenges/2015/paygoal/

Post reply on HN