Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending • Hacker News Board

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

#111

Post by threeseed » Wed, Feb 06, 2019, 10:54 PM UTC

pitaj wrote: post #63

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.

Nobody is necessarily saying get rid of payday loans.

Only that they are heavily regulated to ensure that (a) consumers are fully informed, (b) no lending occurs to people who can't afford them and (c) interest rates are capped to reasonably levels.

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

#112

Post by tryptophan » Wed, Feb 06, 2019, 10:55 PM UTC

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.

>so that they can charge many times the original amount in interest per year.

These are short term (till the next payday) loans. Thats like saying a hotel room costs 36.5k/yr. News websites posting crazy 400% apr numbers are being deliberately misleading. When in reality its more like you pay a 20% fee to get money now and repay it next payday in 2 weeks.

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

#113

Post by mywittyname » Wed, Feb 06, 2019, 10:55 PM UTC

SilasX wrote: post #80

minikites wrote: post #37

Earlier quoted context omitted.

Very few, the "welfare queen" idea is largely unsupported by actual evidence, despite chain emails claiming to document someone buying [luxury food] on food stamps.

Food stamps can be used to purchase lobster. I don't know why you think that's impossible. Edit: I've even seen fast food places accept EBT.

People who seriously object to SNAP, or find it to be too generous should seriously spend a month on it. It's legitimately difficult to shop and budget around because it so restrictive and you don't get much.

Yeah, you may technically be able buy some lobster with your SNAP, but it would cost several days worth of benefits to do so. But if someone is willing to go hungry for a few days in order to indulge in a modest luxury, then why not let them? The whole point of these "free market" welfare programs is that people know best how to spend their money.

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

#114

Post by thaumaturgy » Wed, Feb 06, 2019, 10:55 PM UTC

rayiner wrote: post #89

Arbalest wrote: post #84

Earlier quoted context omitted.

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.

Right, payday lenders are well known to be not-for-profit organizations, focused entirely on their customers' best interests.

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

#115

Post by robertAngst » Wed, Feb 06, 2019, 10:57 PM UTC

dajohnson89 wrote: post #93

towelr34dy wrote: post #58

Earlier quoted context omitted.

I've had to take out loans for my business that were at usury rate. It saved me. If it wasn't there, if it was regulated out of existence; I'd have gone to a shark. I was not going to let cash flow cause me failing. Having said that, I'm very happy there was a lender of last resort that won't break my legs. Despite them screwing me in fees. Honestly, I've never understood people who suffer from legislitis: They see a…

The people using paydays loans usually aren't entrepreneurs, so your example -- while an interesting case -- doesn't apply to the spirit of the regulation. When I had my first real job out of college, I didn't manage my money well and ran out of cash well before my next payday. I went to a check-cashing type of place to try and get a payday loan, but the state had outlawed them a couple of years prior. Had I been gra…

I had to use it because tuition for school + new apartment rent was crazy, and I had just started my new salary job(1/mo payment).

Fees arent bad if you have your shit together. But I did the math ahead of time.

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

#116

Post by eyeinthepyramid » Wed, Feb 06, 2019, 10:57 PM UTC

kevin_thibedeau wrote: post #86

dlp211 wrote: post #49

Earlier quoted context omitted.

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?

Do you think that $420/yr difference is really moving the needle on poverty?

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

#117

Post by dlp211 » Wed, Feb 06, 2019, 10:57 PM UTC

larrywright wrote: post #77

dlp211 wrote: post #64

Earlier quoted context omitted.

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.

It's not about having bank branches nearby, it's about people that can't get traditional loans or credit cards. These are loans of last resort for people that don't have enough (or good enough) credit. The default rate on these is around 20%. I don't have a solution either, but this is a more nuanced issue than just not having a bank nearby.

You are making the assumption that all banks have to work the same. Even at a default rate of 20%, that doesn't justify the 300% APRs that payday lenders charge.

And I agree that banking is not a sufficient solution, but it is absolutely a necessary condition for solving this crisis.

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

#118

Post by dawhizkid » Wed, Feb 06, 2019, 10:57 PM UTC

CydeWeys wrote: post #76

jdavis703 wrote: post #43

Earlier quoted context omitted.

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…

There's been some success with lottery savings accounts in other countries. The idea is that it's very hard to get people interested in saving if they'll only see a handful of bucks per year in interest on the kinds of amounts they'd be saving, but if that saving instead enrolls in a lottery they could see a huge return. Basically, turn small predictable gains into smaller predictable gains plus much larger unpredict…

Agreed. Given the new fintech wave, I'm surprised that there hasn't been a Digit or Acorns competitor for prized-linked savings account rolled out yet.

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

#119

Post by Angostura » Wed, Feb 06, 2019, 10:57 PM UTC

rayiner wrote: post #81

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.

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…

> If you take away that option, I don’t get my car fixed and lose my job. That’s the alternative.

Except the rule that is being killed is the one that told lenders they needed to check to ensure that the borrower would be able to pay the loan back.

In your case, with your car and your job, you would pass this test. And if you couldn’t then lending the money would put you in a worse position than immediate unemployment

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

#120

Post by candiodari » Wed, Feb 06, 2019, 10:58 PM UTC

pitaj wrote: post #63

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.

Ever notice how that's the entire premise of leftist thought ?

"Let's just restructure society the way we see as better", and then the addendum "not by helping - of course, by force of punishment" once politicians come into it.

I wish we went back to the left of the 90s. No more "you can't do X - bad for climate", "you can't do Y - bad for the poor", "you can't do Z - bad for the children".

I want the left back of nuclear powered rockets for everyone. I want the left of a suburban home for EVERYONE with an on-demand electric private tram in front of it. Modernized, perhaps slightly less nuclear (although if that's what's needed, go for it) but essentially that concept. Granted that was more like the 60s, but ...

In the 90s, the left was "We'll give everyone a good life. A car, a home, decent food, some amount of holiday, decent transport, ...". Now it's just "not that. No not that. Not that either. DEFINITELY NOT THAT!". Well, that and conspiracy theories (face it people, Exxon Mobil has a 5% profit margin, 9 in their best years, -40 in their worst. Eliminating all their profits ... won't just pay for everything. And no, that does not make them evil)