The whole report is 49 pages. Thorough and unbiased, it disproves every claim that payday lending is predatory and harmful to consumers.
Comments ... #
Aren't they the same ones that didn't see the current banking crisis coming.
Nope. It was the Department Of Housing and Urban Development that was responsible for the oversight of Freddie Mac and Fannie Mae. That oversight authority was transferred in July of this year to the Federal Housing Finance Agency.
The Fed Reserve is responsible for bank oversight (among a great many other things like the Nation's money supply). They have been pretty much doing their job, keeping a close eye on banks with bad loans on their balance sheets. Which is one of the reasons that we suddenly no longer have 'Investment Banks' of the kind such as Lehman Bros. or Morgan Stanley. They now are "Banks" that take deposits and have demand deposit accounts etc. A demand deposit account is a checking acct. This change brings them under tighter Federal scrutiny.
The study referenced above is sound and based on empiracle data. Sorry if it doesn't fit with your preconceived notions of those bad old payday lenders.
I still don't understand how these vultures are not harmful to society.
They provide a financial service to a particular segment of consumers. Florida's system is the best. In Florida a payday lender has to participate in a system, which they fund, that tracks all Florida loans and does not allow more than one loan at time to one borrower. It protects the undisciplined borrower while allowing for the payday lending industry to make a reasonable profit based on the level of risk. Can you give an example of what the "harm" is given this scenario?
Because the Fed has a lot of credibility...
Ask them how well their dollar is doing.
But the report notes the loans are expensive and likely to be made of under-educated households and households with uncertain income.
So even the report notes they're exploitative despite the marginal benefits.
No one doubts the benefits. You could sell anything on benefits. Once you factor in the costs and the APR. People are getting hosed.
It's called usury.
The "usury" is based on the level of risk. These small loans are risky.
Wow. Are you serious?
That's $390 a year.
That's a 391% APR.
I hope you don't manage anyone else's money.:)
Oh , but I do! And the small loan lending limit in Ohio (before the ban) was 30 days. More importantly the $15.00 fee was fixed. It was the same amount whether borrowed for 1 day or 30 days.
I think everyone should butt out of the Payday Loan business. I don't really like them, they seem sleazy for sure, but they are performing a needed service. First of all very few people are going to borrow $100 for a year. If these guys are run out of business it'll hurt most of the same people you're trying to help. I've never had the need to use one of these places, but what about the poor bastard that has to get a prescription filled or gas for the car and won't get paid for a couple of days. If he bounces a check at his bank it's going to cost him $25.00 or $30.00 anyway. I guess this doesn't seem to bother anyone because the bank appears to be more of a legitament operation.
Maybe another option would be is for everyone that wants to shut these guys down, just add your name and phone number to a list where these individuals that need a little cash for a short period of time could borrow some for say a 5% APR. Sure you may have a few that skip out on you, but at least you could feel good about not overcharging for the service you've performed. Hell it's only money and these people deserve the benefit of the doubt. Then next year if anyone on the list has money left to operate on they could recalculate their earnings and maybe boost the APR up a little bit just to cover losses. If this option sounds like a bad idea then you people should just shut up about Payday Loans.
They kind of lobby for legislation and regulations favorable to them.
Their rules and regulations are set by the state. Hence they are a political entity, not a free market entrepreneurial entity.
And they're a little on the predatory side. Think of all the institutions that hate competition.
What's the APR on a $100 ovedraft with a $35.00 bounced check fee coupled with a $9 DAILEY fee for every day the account is overdrawn? (National City)?
If they weren't fulfilling a need, no one would support them. Plus, where would all the nail salons go?
Holland, regular banks are in crisis, just look at Wamu this last week, where was the Fed Reserve oversight, and that has the potential to be the Tip of the iceberg, especially with the looming credit card crisis that appears to be on the horizon.