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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

#161

Post by noodlenotes »

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…

This brings up an interesting ethical question. Let's say for every entrepreneur who stays afloat because of a payday loan, there are two people who don't manage money well and the payday loan sends them spiraling into debt. Do you prevent all three from taking the payday loan option because it has negative consequences for two of them? What if the ratio of people that benefit from payday loans is more like one in ten? One in a hundred? I don't feel justified in legally preventing the entrepreneur from taking an action that helps them just because two or nine or ninety-nine people have the same freedom and make a bad decision. (That doesn't mean I blanket oppose all regulation however.)

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

#162

Post by pitaj »

Bud wrote: post #128
pitaj wrote: post #63

Earlier quoted context omitted.

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.

This is exactly what I was referring to by "elitism". If people were better off to not have the loans, why would they ever use them? You think you know better than these people, but you are not in their situation.

Perhaps instead of restricting options, you should offer free poverty counseling or something. Expand people's options, don't restrict them.

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

#163

Post by gnu8 »

ACow_Adonis wrote: post #44
andrewla wrote: post #22

Earlier quoted context omitted.

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 b…

But I’m a software engineer so I can solve ANYTHING! /s

Seriously though, I wonder how they seriously imagine streaming money would work. The largest payment processors in the world and all the banks still use IBM mainframes that are the fastest transaction processors in the world. Shared ledgers threaten to consume all of the world’s energy while providing worse performance. I suppose continuously streaming money would consume massive amounts of bandwidth in addition?

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

#164

Post by rayiner »

Arbalest wrote: post #109
rayiner wrote: post #89

Earlier quoted context omitted.

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

Stating that still assumes rational actors. It is based off the premise of "freedom" above all else. The problem with freedom is that the way it is defined really depends on what you want to achieve. Infinite choice is the simplest form of freedom, but in this case, you are enabling market forces to remove the ability for people with poor judgement to lose any capacity for future financial freedom, a form of freedom…

Yes, I’m assuming poor people aren’t irrational. Silly me.

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

#165

Post by rayiner »

thaumaturgy wrote: post #132
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.

> Payday lenders have low losses and high profits (34%+ return on investment) > A payday lender would have to work hard to lose money, even though borrowers are generally low-income and have weak credit histories. Holding a "live" check as security gives a lender strong collateral and leverage over a borrower who, when faced with the threat of criminal prosecution and penalty fees, will keep paying renewal fees every…

That page has no citation for the 34% figure.

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

#166

Post by pitaj »

arthur_pryor wrote: post #157
pitaj wrote: post #133

Earlier quoted context omitted.

Why are people using payday loans if they already have better alternatives? If it wasn't their best option, why would they pick it? Yes, you're making them worse off by removing their best option. > Imagine saying in 1850: "Many 8 year olds work in coal mines. If you remove that option, those kids aren't any better off." Why are kids working in mines if they already have better alternatives? If it wasn't their best o…

the point is, by removing the "least bad" option of an 8 year old working a coal mine, we were forced to improve our labor practices overall. if kids don't have a better option than working in a coal mine at 8, society needs to come up with that better option, rather than giving the kid/family the current "best".

But doing so will only force them into worse options for the time being. By restricting those options, you aren't magically progressing society into higher standards of living. If you want better options, create them. Then you won't need to forcefully restrict other options, people will voluntarily switch over.

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

#167

Post by likpok »

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…

That doesn’t mean there’s no room for improving the industry. If I recall, Colorado recently (within 5-10 years) reformed payday lending towards something a little more lendee friendly. This lead to consolidation in the industry, but not a lack of credit. That suggests that while the market may be efficient, it will still substantively exist with a little push.

As I recall, the changes were to repayment terms, requiring repayment over months instead of immediately, along with other changes.

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

#168

Post by towelr34dy »

bilbo0s wrote: post #156
towelr34dy wrote: post #129

Earlier quoted context omitted.

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…

> Loan sharks, prostitutes, druggies... that's part of life there... Just saying as someone who grew up poor here in the (???) "first world" (I guess?), those things are part of life here. And our police are generally very aggressive in reminding us that all of them are illegal. Payday loans are like the drug dealers. There really is no difference. They happily give you access to their product as long as you pay them…

You are literally touting the war on drugs as an example of what to do with payday lending.

OMG. Ok. Personally I'm happy my payday lender wouldn't murder me like a drug dealer would. But.. I guess that's preferable? I'm at such a loss.

BTW, Don Vitto says thank you from the deepest part of his heart.

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

#169

Post by rosser »

SilasX wrote: post #126
mywittyname wrote: post #113

Earlier quoted context omitted.

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 ab…

> 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.

Can you please point out where anyone has ever legitimately argued that?

I think we're all aware social programs are abused. I also think we're better off with them, even being abused, than without.

Much, I would note, like so many in the broader discussion are arguing regarding these lenders...

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

#170

Post by kortilla »

fzeroracer wrote: post #148
towelr34dy wrote: post #141

Earlier quoted context omitted.

How dare consenting adults do things I find offensive. I don't drink. Drunk people act stupid. Let's ban alcohol. It'll be great. Prove to me it won't! Oh, you enjoy alcohol responsibly? That's just anecdotal. Not like MY anecdotal evidence, I see drunks everywhere... everyone knows that. And they are all alcoholics who are depraved by predatory beer companies. My anecdotal evidence is good and corroborated by my tri…

I mean despite your terrible sarcasm, we do have rational regulations on things like alcohol or gambling because we recognize that it helps protect people overall, sometimes indeed from themselves. Your argument is essentially 'I don't drive drunk, therefore we don't need any laws against drunk driving' since the expectation is that people will behave rationally. Or that we don't need regulations against things like…

What are these rational regulations? Does the ban on buying cold beer from a gas station in Indiana have a strong backing showing that the cold beer barrier is reducing alcoholism? I’ll save to some time, there is no link. It’s protectionist crap hidden behind the guise of moralizing.

States have wildly different liquor laws they all claim are “rational”, which may be true but they certainly aren’t rational to protect people. They are just designed to exploit moralizers to protect (liquor stores, grocery stores, bars, legal firms, etc).

These laws are so stupid that there are only a few cities in the entire United States where you can consume a beer in public despite there being separate laws banning public intoxication! WTF!?

People are far from “rational” when getting on the moralizing icky feelings bandwagon.

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