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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

#191

Post by SilasX »

towelr34dy wrote: post #58
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.”

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've had to take out loans for my business that were at usury rate.

So has Google, when it started out. (Servers bought on the founder's overstretched credit cards.)

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

#192

Post by analog31 »

golergka wrote: post #121
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.”

Freedom is nothing without freedom to make mistakes.

Oddly enough, people who are more successful, tend to have more of a safety net that protects them from the worst mistakes. They do have more freedom, usually provided by their parents. De-criminalizing financial mistakes is one of the great breakthroughs of modern society.

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

#193

Post by dlp211 »

kortilla wrote: post #186
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.

So are banks, credit card companies, etc. Their dream is always the customer making minimum payments and maybe some late payments for fees. Look at the dump that is Wells Fargo and the their precious behavior with deposit/withdrawal ordering in daily reconciliation to screw people into overdraft fees. Drawing the line at payday lenders seems super arbitrary.

The CFPB has gone after Wells Fargo and other banks for exactly that reason.

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

#194

Post by m463 »

towelr34dy wrote: post #58
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.”

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…

It would be more ethical on all sides if there were hard limits on the "usury rate".

I think it was acceptable in the past when credit cards had a hard limit on the interest percentages (I recall maybe 12%?).

I was kind of appalled when the percentages were relaxed years back and when 24% and 36% became possible, they were immediately the norm.

Availability of capital is great, but not at the expense of perpetual indentured servitude.

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

#195

Post by kelnos »

kortilla wrote: post #134
Arbalest wrote: post #125

Earlier quoted context omitted.

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.

>the assumption that all players are rational actors. A.k.a the assumption that people should have agency

Not at all. Just because you have agency, it doesn't mean you'll wield it rationally, or even responsibly.

And so you get the central question: in what cases should you protect people from themselves? It's a hard question to answer. Given that financial education in the US is nearly nonexistent, I would personally err on the side of protections in the financial sphere. Does that mean that some legitimate cases get denied? Probably. Is that a worse outcome? I don't know the answer to that.

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

#196

Post by quickben »

towelr34dy wrote: post #58
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.”

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 very happy there was a lender of last resort that won't break my legs"

All of your support and encouragement of a superbly predatory practice comes from that line. You were happy that nobody broke your legs.

Do compare that with the history of slavery, where outside of conquest, people became slaves because they couldn't fulfill their financial obligations.

> "I mean, no where do they seem to be hinting at creating a government agency for lending of last resort"

North Korea has a government agency that is a collector of debts of last resort. For the debtor, or their immediate or extended family, or friends.

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

#197

Post by rosser »

SilasX wrote: post #182
rosser wrote: post #169

Earlier quoted context omitted.

> 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…

>Can you please point out where anyone has ever legitimately argued that? How about where I entered the thread? https://news.ycombinator.com/item?id=19100636 >chain emails claiming to document someone buying [luxury food] on food stamps. -- >I think we're all aware social programs are abused. I also think we're better off with them, even being abused, than without. And I think it's unrealistic to model the abuse as o…

Do I read you correctly as saying that the anecdotal evidence of the kinds of abuse you're concerned about (in the form of chain emails, &c) outweighs the actual, you know, "research" that has been done on these programs, their use, and their outcomes, and that there is instead some kind of systemic abuse by "pockets of underclass that grows up not knowing anything different"?

Because, yeah. We're just going to talk past each other here if so. Back to my deadline.

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

#198

Post by stevesimmons »

nopriorarrests wrote: post #158
tantalor wrote: post #151

Earlier quoted context omitted.

> Levels of fraud are epidemic... you factor it into your interest rate What does that have to do with fraud? Who is the fraud? > Ironically enough... "social score credit" This is the very problem social credit score is intended to solve. How is it ironic?

>What does that have to do with fraud? Who is the fraud? What does interest rate have with fraud? Well, for each 1000$ loaned out, say, $100 will be defaulted by some honest dude who had no money to pay back in time, and $100 will be loaned to someone who had no intention to pay it back. Numbers are random of course, but they give the idea. To keep your business operating, you have to charge enough interest to compen…

Plus, in order to get those 20% loss rates, you have to decline 80% of people, and half the 20% accepted will decide the rates are too expensive. So only 10% of applicants end up taking a loan. Then a $10 per application marketing/processing cost and $5 per application decisioning cost translates to $150 cost per loan booked.

Using the numbers above, it would cost $350 to lend $1000. That's 35%. If the loan term is 2 months, the APR is annualized by compounding that 35% 6 times, giving 500%. If the loan is amortizing, the APR calculation comes out a lot higher, probably more like 1000%.

This is the fundamental economics of high-cost, short-term credit (HCSTC).

It is UK, where I am, HCSTC is highly regulated by the FCA. The nominal interest APRs are less important that a regulatory rate cap: customers cannot be charged more than 100% total interest and fees for loans up to 12 months.

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

#199

Post by viraptor »

jopsen wrote: post #173

Why don't other countries have problems with payday lending? My guesses: - People aren't as desperate - Lending can only happen though banks - Loans can't be given to you can't prove reasonable chance of repayment - You can't garnish people paycheck below a certain amount, so payday lender would never get any money. Any other explanations?

> Why don't other countries have problems with payday lending?

Why do you think they don't?

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

#200

Post by lazyasciiart »

pitaj wrote: post #166
arthur_pryor wrote: post #157

Earlier quoted context omitted.

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.

Citation needed.
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