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.”
Freedom is nothing without freedom to make mistakes.
Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
121–130 of 305 posts
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#122Anytime 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 ofte…
Then they could offer a flat fee instead of an ever compounding one that is predatory to their clients (but they dont.)
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#123Earlier 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…
> Payday lenders, by contrast, operate in a market with immense amounts of competition. There’s one on every block in most places.
This is very peculiar reasoning. Why did you go with, "payday lenders must be struggling to provide crucial services because there's one on every block", instead of, "there are payday lenders on every block because it's a stupidly profitable business"?
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#124Earlier quoted context omitted.
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.
Some big lending companies issue bonds to finance their operations.
And, ironically enough, these bonds are _high yield_, meaning market does not trust that these companies are making money hand over fist.
Any negative macroeconomic shock (like recession) can easily raise average loan default rate 2-3x and sink payday lender business in a single quarter.
Such is life.
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#125Anytime 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.”
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…
I'm sorry to dismiss this more or less out of hand, but this is a case of anecdotal evidence. Using your case to generalise to greater choice is falling victim to the assumption that all players are rational actors.
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#126Earlier quoted context omitted.
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…
>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.
I completely agree, but the typical case isn't "hey, I rewarded myself for showing restraint in spending my benefits while I work myself out of poverty" (which I completely support) but "stars above, it wasn't enough, again, woe is me, I need more indefinitely and why change if they'll cut my benefits ones I have gainful employment?".
But back to the original topic, it's fine to argue that the typical food stamp recipient isn't high on the hog. It's not fine to act like no luxury good has ever been bought on food stamps, and every recipient is a meticulous steward of taxpayer's largesse, ceaselessly working toward the day when they don't need public assistance.
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#127From the article: > The way payday loans work is that payday lenders typically offer small loans to borrowers who promise to pay the loans back by their next paycheck. Interest on the loans can have an annual percentage rate of 390 percent or more, according to a 2013 report by the CFPB. Another bureau report from the following year found that most payday loans — as many as 80 percent — are rolled over into another l…
Is your point that the US government should get into the payday lending business?
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#128Anytime 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.
You don't actually know, pitaj, that those people are not better off. You just made that up. I think the odds are much better that those protected from usury are, in fact, better off.
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#129Earlier 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…
If you really ever needed money, you'd have gotten it.
I grew up poor in the 3rd world. Loan sharks, prostitutes, druggies... that's part of life there.
Honestly, your judging something from a certain position that's pretty obviously removed from ever really being needing money (in poor areas there are a options to get money, restricting those would be blessing to the illegal loan sharks that already operate in most desperate places)
I have to say, if you really ever were in such a situation, you'd be advocating not for restrictions, but for options.
Saying we should restrict it because it can be bad... well you should be arguing about restricting alcohol then... there are plenty of alcoholics. Maybe also restrict driving. And fatty foods. And salt. Maybe sugar? Keep at it.
The critics are 100% right. Sorry to say, but it seems you are annoyed at the sneezing, not REALLY caring about the sick.
Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending
#130Earlier quoted context omitted.
> Which consumers is the CPB protecting? Those very same consumers. Large, established players do not want to even touch that customer base because it represents a high risk and a low payoff. These are the only financial services these people have access to. Cutting that off is not a solution. Encouraging competition and increasing the number of players will reduce the "obscene fees". People aren't stupid, they'll al…
From that article: The first thing that really struck me in the book is that there are more payday lenders and check cashers in the United States than McDonald's and Starbucks combined. Is that true? How much more competition do you think there can be? And if "These are the only financial services these people have access to" and "fees are high because because it represents a high risk and a low payoff", why do you t…
> How much more competition do you think there can be?
Quite a bit more, apparently. See the other comments here. There are startups trying to tackle the problem.
Regulation is not the answer. Competition is.
If you feel you can provide better service at a lower cost, the field is wide open.