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Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

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

#81

Post by rayiner »

CydeWeys wrote: post #67
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.

And Facebook and Google want to get you locked in a cycle of mindless browsing and ad consumption. The difference is that Facebook and Google operate in markets with high barriers to entry resulting in fat profit margins. Payday lenders, by contrast, operate in a market with immense amounts of competition. There’s one on every block in most places.

Payday lenders don’t lock people in cycles of debt. What looks people in cycles of debt is that their income levels are marginal so any unexpected event can totally derail them.

I have a paid off car. When I got into a fender bender, I needed to pay $2,500 out of pocket to fix it because I don’t carry insurance for damage to my own vehicle. If I was poor, what would I do? I can go to a payday lender, who has to charge high fees because poor people are high risk. I’m caught in a cycle of debt—because I couldn’t afford that expense to begin with. But at least I can get around. If you take away that option, I don’t get my car fixed and lose my job. That’s the alternative.

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

#82

Post by bko »

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.”

From another article:

> A typical two-week payday loan comes with a $15 fee for every $100 borrowed and has an annual interest rate of nearly 400%, according to the CFPB. Over

It's technically 400% APR, but its because the amount borrowed is very low. What should the rate be? 10% or ~$0.40 for the two week loan? There is a certain amount of overhead in processing a loan. Especially considering that the clientele often prefers a brick and mortar location and personalized service.

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

#84

Post by Arbalest »

CydeWeys wrote: post #67
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.

GP starts with a fairly simple premise, the rate of default is high, so that much interest is required to make up the shortfall. Of course the rest of it is hinged solely on this premise, rather than acknowledging that the very act is taking advantage of people who can't or won't think far enough ahead to see why it is a very bad idea. It is of course the old argument that some economists use a little too regularly that all participants in the economy are rational actors.

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

#85

Post by rayiner »

mrhappyunhappy wrote: post #79
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…

Nobody is denying people credit. Payday loans are predatory and perpetuate poverty instead of helping to solve it. It would be great if they were transparent and didn’t try to rob you in the process, but that’s just not how they work.

It’s not like there are lenders serving these demographics that don’t do whatever you think payday lenders are doing wrong.

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

#86

Post by kevin_thibedeau »

dlp211 wrote: post #49
kevin_thibedeau wrote: post #33

Earlier quoted context omitted.

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.

Cable is not a necessity. $15 cell plans on $100 phones are easily doable @ $280 per year. How many have a subsidized iPhone on a $50+ monthly plan?

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

#87

Post by mrhappyunhappy »

calvinmorrison wrote: post #75
CydeWeys wrote: post #67

Earlier quoted context omitted.

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.

Honestly, they're providing a service and there are customers. Walter block who is a noted austrian-school economist did a fun set of books called "Defending the Undefendable" where he runs through thought experiments about Slumlords, Payday Lenders, Pimps, etc. I'm not asking you to agree with him, or start defending pimps but reading through some of those is a fun way to get a different take on things. Book is avai…

The service is masked in high fees that do not apply to your principle payments. They are borderline fraud. Had try been totally transparent then we wouldn’t need to regulate the industry as much. The fact that anyone can defend a payday lending operation knowing how it works is puzzling. I don’t know what your motivations are or of those who say nice things on behalf these “businesses” but they are certainly not in the interests of the consumer.

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

#88

Post by dawhizkid »

foobiekr wrote: post #74
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?

Could you share which companies you are referring to?

Earnin https://www.earnin.com/

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

#89

Post by rayiner »

Arbalest wrote: post #84
CydeWeys wrote: post #67

Earlier quoted context omitted.

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.

GP starts with a fairly simple premise, the rate of default is high, so that much interest is required to make up the shortfall. Of course the rest of it is hinged solely on this premise, rather than acknowledging that the very act is taking advantage of people who can't or won't think far enough ahead to see why it is a very bad idea. It is of course the old argument that some economists use a little too regularly t…

The idea that selling products and services to poor people is “taking advantage of them” in the terms reality demands is bonkers.

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

#90

Post by philjohn »

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?

Far fewer than you'd think.

Your comment isn't a particularly helpful thing to say as it attempts to paint struggling people as frivolous, and undeserving of help.

There are many people who are barely scraping by, they drive an old car (because public transport in many places is a joke), and they're just one expensive repair away from having to make hard decisions.

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