Outstanding Article on Payday Lending

[JSojourner]

Are any of you aware of positive steps being taken to curb this predatory practice?  There is rightly much focus on bad loans made to businesses, homebuyers and so forth.  But these slimeballs and their counterparts in the "rent to own" industry are particularly worriesome to me. Some of my neighbors have been ruined by these pukes...


http://www.prospect.org/cs/articles?article=a_bridge_to_somewhere

[opebo]

Can't blame the maggots for the murder, JSojourner..

[JSojourner]

Can't blame the maggots for the murder, JSojourner..

LOL

[Marokai Backbeat]

Payday lending really should be banned, it's such a horrible practice and has hurt more people in my area than I can count. At least, though, Ohio voted to cap payday loan interest rates last year.

[JSojourner]

Payday lending really should be banned, it's such a horrible practice and has hurt more people in my area than I can count. At least, though, Ohio voted to cap payday loan interest rates last year.

Yes.  Governor Strickland was behind that.  What were the rates before and what are they now?  No small number of Republicans accused him of being an anti-business Socialist for pushing and signing this legislation. 

How absurd.  Capping interest rates on predatory lending is now a precursor to Communism. 

[Marokai Backbeat]

Payday lending really should be banned, it's such a horrible practice and has hurt more people in my area than I can count. At least, though, Ohio voted to cap payday loan interest rates last year.

Yes.  Governor Strickland was behind that.  What were the rates before and what are they now?  No small number of Republicans accused him of being an anti-business Socialist for pushing and signing this legislation. 

How absurd.  Capping interest rates on predatory lending is now a precursor to Communism. 

We voted to cap them at 28% interest, previously they were around 391% interest. (No, that's not a typo.)

[Alexander Hamilton]

Can't blame the maggots for the murder, JSojourner..

LOL

[Alexander Hamilton]

Payday lending really should be banned, it's such a horrible practice and has hurt more people in my area than I can count. At least, though, Ohio voted to cap payday loan interest rates last year.

Should be banned. People and the government both need to learn to live within their means. Acknowledge spending capabilities and leave some extra room.

[JSojourner]

Payday lending really should be banned, it's such a horrible practice and has hurt more people in my area than I can count. At least, though, Ohio voted to cap payday loan interest rates last year.

Yes.  Governor Strickland was behind that.  What were the rates before and what are they now?  No small number of Republicans accused him of being an anti-business Socialist for pushing and signing this legislation. 

How absurd.  Capping interest rates on predatory lending is now a precursor to Communism. 

We voted to cap them at 28% interest, previously they were around 391% interest. (No, that's not a typo.)

So lowering interest rates from 391% to 28% is Socialism, according to some of Strickland's critics?  I would support a cap at like 7%.  But then, my goal would be to put these bastards out of business.

[Ban my account ffs!]

Payday lending really should be banned, it's such a horrible practice and has hurt more people in my area than I can count. At least, though, Ohio voted to cap payday loan interest rates last year.

Should be banned. People and the government both need to learn to live within their means. Acknowledge spending capabilities and leave some extra room.

Jesus if I hear one more person say "live within their means"

Government can live within whatever means it chooses to.  And it can expand or contract those "means" whenever lawmakers decide to do so.

The idea that the government should conform to your delusional idea of a household budget is absolutely asinine.

I really hope you have some major financial difficulties so I can be the first one wagging my finger at you going "well, if you had just chosen to live within your means"

Because it really f**king helps.

[dead0man]

These places no doubt suck and I'm not against regulating the max interest they can charge, but we can't legislate them away.  Sometimes poor people need loans too.

[JSojourner]

These places no doubt suck and I'm not against regulating the max interest they can charge, but we can't legislate them away.  Sometimes poor people need loans too.

That works for me.  As long as the rates they charge are the same any other schlubb has to pay.  Which would, by default, put these bastards out of business.

Now requiring banks to loan to "browns" and "poors" on the same terms they offer to middle class whites is another discussion entirely.

[opebo]

These places no doubt suck and I'm not against regulating the max interest they can charge, but we can't legislate them away.  Sometimes poor people need loans too.

My point with the maggot post was that these poor people are already being destroyed by the rich a a whole - its unreasonable to blame these particular loan sharks for feeding on the carcass. 

[I spent the winter writing songs about getting better]

Payday loan providers are needed. Sometimes people just need the money. Abolishing them altogether or putting them all out of business would hurt poors more than help. Of course absurd interest rates should be capped. I'd put 10% as the max interest rate.

[JSojourner]

Payday loan providers are needed. Sometimes people just need the money. Abolishing them altogether or putting them all out of business would hurt poors more than help. Of course absurd interest rates should be capped. I'd put 10% as the max interest rate.

That's because you're a sane.  Dudefest, notwithstanding.  ;-)

[opebo]

Payday loan providers are needed. Sometimes people just need the money. Abolishing them altogether or putting them all out of business would hurt poors more than help. Of course absurd interest rates should be capped. I'd put 10% as the max interest rate.

Per week?

[Richard]

You know, for more than a millennium the Babylonian empire capped interest rates at 20% on silver and 33 1/3% on grains (to be repaid at harvest time).  The Greeks didn't cap it, but slavery for debt was limited to 3 years.  The Romans capped it generally at 8 1/3% to 12% and for a brief while outlawed it.

That is not to say there weren't payday loans around...  There were, and in Greece it often went over 60%.  But *most* of these places had a law that stated the interest can't ever exceed the principal.

Did we miss the memo somewhere?

Cap loans made to individuals at 15% per annum, inclusive of *all* fees and service charges.  I'm generally a libertarian, but most people do *not* realize the power of exponentiation and that is a real problem.

Loans made to corporations do not require a cap.

[dead0man]

Payday loan providers are needed. Sometimes people just need the money. Abolishing them altogether or putting them all out of business would hurt poors more than help. Of course absurd interest rates should be capped. I'd put 10% as the max interest rate.

Then those places would close and the poor people would be hurt.  10% is too low.  Maybe the low to mid 20s. 

(for a year, not a month or a week of course...just to make sure we're on the same page here)

[opebo]

Actually I'm sure those places would close if they could only get even 20%/year.  More like 10-20% per month is reasonable for high risk loans.

I know it may seem strange to hear this from me, but I'm not for these sorts of 'treat the symptoms' solutions.  Everyone is outraged by high interest rates, but no one seems to be interested in what made the poor vulnerable in the first place - of course I understand its easier to just make a law abolishing high rates than to overhaul the whole abusive system.

The net result of banning payday loan places (or anyway the high rates necessary for them to exist) would be the resurgence of illegal loan sharks.  Better to offer a generous dole and high working class wages in order to obviate the need for such predatory lending.

[I spent the winter writing songs about getting better]

Here's a solution: How about we just nationalize them? Create a federal agency to deal with this. That one could easily function with a mere 10% interest rate. By the way by that I mean per loan. If you take out $500, you owe back $550. I thought the whole point of a payday loan was that you would be able to pay it back in only a few days.

[dead0man]

What do they do when the check bounces?

[I spent the winter writing songs about getting better]

What do they do when the check bounces?

Collect on them like any bank does.

[Alexander Hamilton]

Here's a solution: How about we just nationalize them? Create a federal agency to deal with this. That one could easily function with a mere 10% interest rate. By the way by that I mean per loan. If you take out $500, you owe back $550. I thought the whole point of a payday loan was that you would be able to pay it back in only a few days.

I agree with this. It will also provide revenue towards balancing the budget and paying off our own debt.

[Richard]

Here's a solution: How about we just nationalize them? Create a federal agency to deal with this. That one could easily function with a mere 10% interest rate. By the way by that I mean per loan. If you take out $500, you owe back $550. I thought the whole point of a payday loan was that you would be able to pay it back in only a few days.

Because it will not work.  If payday companies do that they will be bankrupt; if a government agency did it it will need to draw on the Treasury.

Interest is a result of risk.  You cannot group a bunch of risky loans and somehow get an almost riskless security.  Do you want to go through another mess much like the MBS mess?

[opebo]

Interest is a result of risk. 

Well, actually interest is the result of power.