The Payday Loan Trap
source: This video via NerdWallet If you have poor credit and little savings but need cash in a hurry, a payday loan can seem like the best choice out of limited options. But payday loans come … [Keep Reading. ]
Lending Club and Peer to Peer Loans Impacting Traditional Banking Industry
In just eight years, Lending Club has figured out how to provide a faster small-business loan--and paved the way for a growing group of financial disrupters. On numerous occasions, we have written … [Keep Reading. ]
New FICO Score: Millions of Consumers Deemed Too Risky May Now Get Credit
The big profits of payday lenders may be over
USA Consumer Advocate Seeks Tougher Regulations on Payday Loans
In defense of payday loans. “The Case Against New Restrictions on Payday Lending,” Todd J. Zywicki of George Mason University’s Mercatus Center concludes that “Economic theory and empirical evidence strongly suggest that…paternalistic regulations would make consumers worse off, stifle competition, and do little to protect consumers from concerns of over indebtedness and high-cost lending.” source: http://cfsaa.com/our-resources/policymaker-resources/restricting-payday-loans-harms-consumers.aspx
The study found that: Payday loans are more attractive than potential alternatives. “Those who use payday loans have limited alternative sources of credit, such as pawn shops, bank overdraft protection, credit card cash advances (where available), and informal lenders. Although expensive, payday loans are less expensive than available alternatives.” Eliminating payday loans does not eliminate the need for short-term credit.
The following video discusses "Broke, USA" by Gary Rivlin. For most, the Great Crash of 2008 has meant troubling times. Not so for those in the flourishing poverty industry, for whom shrinking wages, pink slips, and other economic woes spell an opportunity to expand and grow.
Over the years, any number of mercenary entrepreneurs have taken advantage of an era of deregulation to devise high priced products to sell to the credit-hungry
ranks of the working poor, from the instant tax refund to the payday loan. In the process, they've created an industry larger than the casino business and proven that even the pawnbrokers and check cashers, if they dream big enough, can grow very, very rich off those with thin wallets.
Looking back across three decades, Gary Rivlin uncovers how the poverty industry actually invented the predatory subprime loan in the 1980s - eventually inspiring the likes of Countrywide and Wells Fargo to repurpose these toxic products for the USA's middle class.
As Rivlin's tale reveals, these large chains are not only making fat profits and contributing to our current financial crisis - they are at the heart of it. "Broke, USA" is Rivlin's riveting report from the economic fringes. From the annual meeting of the national check cashers association in Las Vegas, to a tour of the foreclosure-riddled neighbourhoods of Dayton, OH, it's a subprime Fast Food Nation featuring an unforgettable cast of characters and memorable scenes. As Wall Street and the White House struggle to save the economy from collapse, Rivlin travels across the country profiling players ranging from a former small-town Tennessee debt collector whose business offering cash advances to the country's working poor has earned him a net worth in the hundreds of millions, to legendary Wall Street dealmaker Sandy Weill, who rode a subprime loan business into control of the nation's largest bank. He parallels their stories with the tale of those committed souls fighting back against the major corporations, chain franchises, and newly hatched enterprises that are fleecing the country's hard-working waitresses, warehouse workers, and mall clerks. Timely, shocking, and powerful, "Broke, USA" offers a much needed look at why our country is in a financial mess and gives voice to the millions of ordinary Americans left devastated in its wake.
Here's a link to the book on Amazon: Broke, USA
Category: Payday loans