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

61–70 of 305 posts

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

#61

Post by MRD85 »

rosser wrote: post #8
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 grew up in a flyover state with a history of very creditor-friendly laws and (limited) legal gambling. It's boringly, heartbreakingly common there to see small, multi-tenant commercial buildings where one of the tenants is a payday loan place, and another (if not the other) is a "video lottery"/casino type joint. In the limited digging I ever bothered doing, both establishments (and often the building) were ultimat…

In Australia we have widespread legal gambling. We have all sorts of laws about where you can even place ATMs near gambling facilities. If the laws made it legal I'm positive we'd have loan shops next to gambling facilities.

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

#62

Post by scottlocklin »

i_am_proteus wrote: post #54
braythwayt wrote: post #28

Earlier quoted context omitted.

If you read the article, there's a little more nuänce than that. One thing listed right up front is a limit on how many times a lender can try to withdraw funds from your account. If they have, say, a $200 NSF charge, and your payment bounces, they can try every business day, racking up $1,000 a week in NSF fees. Companies that do this kind of thing aren't trying to collect their original payments in good faith, they…

Nonetheless, payday lenders are not exactly making money hand over fist. Predatory practices to recover as much money as possible are, in aggregate, a reflection on the risk profile (i.e. staggering default rate) of these borrowers. Prohibiting these practices with no replacement measures just raises the rate or reduces loan availability. Realistically, people who can't get even a (legal) payday loan often turn to pl…

Erm, do you have evidence that payday lenders are not making money hand over fist? This is a large statement with no evidence. I'm assuming they're quite profitable and low risk, for the same reason I assume fast food is; you see them everywhere there are poor people.

Making usury illegal has no downsides.

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

#63

Post by pitaj »

firasd wrote: post #31

Anytime I see people defend this kind of practice, the John Ruskin quote comes to mind: “The dullest of all excuses for usury is that some kind of good is done by the usurer.”

Many people make use of payday loans. If you remove that option, those people aren't any better off. Restricting or prohibiting payday loans is politicians saying they can make better choices than the people they're claiming to help.

Does it come from good intentions? Of course. But it's also fundamentally elitist.

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

#64

Post by dlp211 »

larrywright wrote: post #52
minikites wrote: post #21

Earlier quoted context omitted.

Why are those the only two options? Is there a shortage of wealth in the USA?

How exactly does that work? Person A had an unexpected expense and needs a little help, so we just take it out of the pocket of Person B, who happens to be the nearest wealthy person?

If that was what payday loans were actually used for then their existence would be a little bit easier to justify. That isn't what payday loans are used for. They are usury of the worst kind taking advantaged of the worst off in our society.

I'm not going to sit here and pretend I have a definitive solution, but perhaps bringing actual banking to these neighborhoods would be a good start.

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

#65

Post by Nasrudith »

minikites wrote: post #21
refurb wrote: post #18

This decision really comes down to are people better off if:(1) they have access to loans even if they are high fee or (2) they are better off if they can’t get the loans at all?

Why are those the only two options? Is there a shortage of wealth in the USA?

Well not the only options for improvement clearly but those are the only two options currently for loans.

I wonder if it is possible to ethically undercut them in a sustainable way with low margin with first cut of paycheck or similar.

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

#66

Post by potta_coffee »

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'm sure that some people can't afford to live and take these loans. I've also personally known people who take them because they're terrible at managing money, and they make impulsive choices.

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

#67

Post by CydeWeys »

rayiner wrote: post #59

The rules were misconceived to begin with, by people who mistook the symptoms for the problem. There is a ton of competition in payday lending—there is zero reason to believe that payday lending rates are higher than the efficient amount. There is no hint of market failure, systemic risk, or any of the other criteria that typically justify regulating financial institutions. That means this rule wasn’t really a consum…

Payday lenders are predatory. They want to get people locked into a cycle of debt, so that they can charge many times the original amount in interest per year. I'm surprised to see anyone defending them.

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

#68

Post by dawhizkid »

I'm surprised that Prize Linked Savings Accounts (PLSAs) aren't more mainstream (https://en.wikipedia.org/wiki/Prize-linked_savings_account). Legality is state dependent I believe, and CA just passed into law late last year.

Plenty of studies show that they encourage more savings from those who previously did not save.

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

#69

Post by Someone1234 »

seibelj wrote: post #56

There is still no law against spending your entire paycheck on lotto tickets, nor taking out a loan and spending it entirely on lotto tickets. The government seems to pick and choose what mistakes they allow their citizens to make.

Nowhere in the regulations is government banning PayDay loans (now or previously). This is about setting limits on just how much profit they can make per loan (since financial complexity makes it trivial to hide the true dollar cost).

And actually lotteries are heavily regulated, particularly in relation to odds, costs, and complexities. You know, when you buy a ticket, exactly how little chance you have.

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

#70

Post by munk-a »

untog wrote: post #35
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.

Sure, but which one is easier to solve: predatory payday loans or the unaffordability of life? The instinct to want to solve the big problem is a good one, but it's a path to hell paved with good intentions. You'll end up struggling to ever solve the big problem, and ignore a series of effective, small fixes along the way.

It isn't so difficult to fix the unaffordability of life, the US government was, for a while, quite happy to experiment with programs that aided the working poor by providing financial relief so they could secure more stable employment and lives - Helsinki recently invested in a distributed free-housing campaign that has had a noticeable impact on poverty.

The US is stuck in a silly "American Tough" outlook of people pulling themselves up by their bootstraps when a little bit of well targeted aide can help society immensely. There is a wonderful old MLK quote

> We all too often have socialism for the rich and rugged free market capitalism for the poor

so as a society we should closely examine the money that gets funneled to quantitative easing, subsidies for fossil fuels and other corporate bailouts, along with the reduction of progressive taxes like luxury and estate taxes... and consider how far that money would go if put into SNAP, CHIP and public housing.

Post reply on HN