Page 1 of 1 pages
“Who the heck can be on the side of charging 521 percent interest rates for people that are vulnerable and desperate?”
I am, as someone who wants that vulnerable and desperate person to be able to get money he obviously needs very badly and immediately. If 521 percent is the best deal he can get (and if he could get better then why wouldn’t he?) for money he needs badly and immediately, then all this legislation does is stop him from getting the money he needs.
Don’t kid yourself into believing this bill protects people from “predatory” lenders (ya know, those lenders that are actually stepping up to the plate and offering these needy people an option). At best, it protects a desperate borrower from himself (if he doesn’t really need the money, it helps him avoid a potentially painful financial transaction), and, at worst, it takes away his best option to get money he deperately needs now.
The borrowers that use “payday” lenders aren’t the kind of people that maintain a line of credit at a bank. These people live paycheck to paycheck. No cash, no food…no cash, no medicine…no “payday” lender, NO CASH.
Look at this example:
You need $200 now. The lender will give it to you for a fee of $20 if you pay back the $200 in one week (with a post-dated check).
Sounds like a pretty good deal for someone who really needs $200 now, huh? Little or no paperwork, no collateral, and walk away with the $200 cash now. All for $20.
I bet there’s plenty of people who, in a pinch, would consider that pretty good terms and would gladly pay it.
What’s the annual interest rate? 520%.
This legislation stops such borrrowers and lenders from entering this mutually beneficial transaction, all so that the masses who don’t need such services can feel like they are helping the people who do need such services. Feel good liberalism once again hurts those it purports to help.
Posted by jeffc on Aug 7, 2006 at 12:26 PM
“But if the service is so popular, why did lawmakers nearly fall over themselves to pass the interest cap?”
Duh. Because the service is popular with the small segment of society that needs the service. Obviously, it’s not used by most of the electorate that has, for example, credit card availability, and as such doesn’t need the service.
The legislators are accountable to the electorate as a whole, which is comprised mostly of people that don’t use the service. To the broader electorate, this valuable service can be made to seem like a crime, and they don’t understand the benefits of such a service, so they are against this “punitive” service (an oxymoron if I ever heard one). What does it hurt them to take away this transaction that they have no part in and that is obviously considered mutually beneficial by those parties that do have a part in the transaction? It helps them sleep at night, even as they harm those they think they are helping.
Posted by jeffc on Aug 7, 2006 at 12:42 PM
“It’s been very exciting to show Democrats that when you get out there on an economic issue and show that you are on the side of everyday working folks, there’s power in that nexus.”
That should be amended to, “It’s been very exciting to show Democrats that when you get out there on an economic issue and show that you, on the surface anyway, appear to be on the side of everyday working folks, despite the fact that the policies you support, on balance, hurt the very people they were supposed to help, there’s power in that nexus.”
“Politics is about winning.”
Exactly. It’s not about good policy. It’s about winning. The minimum wage and “predatory” lender “victories” are irrefutable evidence of that.
Posted by jeffc on Aug 7, 2006 at 12:50 PM
As a group who spends 100% of it’s resources organizing the working poor, ACORN has seen the damage done by predatory lenders. We have worked hard in over a dozen states to bring this to the public eye and help curb the new robber barons of the 21st century.
Posted by oregonacorn on Aug 7, 2006 at 2:40 PM
Good comments by jeffc. And the main argument used by people who are using payday lenders as targets of their “consumer activism” - that payday loans carry outrageous triple-digit interest rates - is in fact invalid. You cannot fairly evaluate a payday loan in terms of an annual percentage rate because of the fixed costs involved in making a loan. If payday lenders were limited to a 36% APR, for example - as they are in many states which have effectively outlawed the practice thereby - then a lender could charge no more than $1.38 for two-week, $100 loan, which obviously nobody can do because the lender’s costs are way higher.
Anti-payday-loan legislation is essentially anti-freedom legislation. The government is essentially making it illegal for one person to say to another, “I will lend you $100 today if you will pay me back $101 tomorrow” (a 365% annual interest rate). Is that the “progressive” result you people want?
If payday lenders are making so much money overcharging poor people for loans and “consumer activists” want to help them, then why don’t they just offer poor people loans for smaller fees - or encourage the government to set up a program to do so? No, instead they want someone to criticize, to complain about triple-digit interest rates and to dishonestly call payday lenders loan sharks when loan sharks are people who use violence to collect on loans which payday lenders certainly do not.
Consumer activism should be about stopping dishonest advertising and practices, not dictating to a business that has not received any government assistance how much it may charge for its product or service. The free market works quite well and will take care of that if allowed to operate freely. Right now people are discouraged from entering the payday loan business because of the libel, slander, and unfair regulations that are being directed at payday lenders. That is what is curtailing the proper operation of the free market and keeping payday loan prices higher than they could be (although at some Internet sites you can get payday loans for as little as $8 or $10 per $100 loaned, which is less than the reform the Oregon group wanted to have people vote for).
Please see the article “In Defense of Payday Lending” by Tom Lehman, Assistant Professor of Economics at Indiana Wesleyan University, at http://www.mises.org/freemarket_detail.asp?control=454
Posted by injon on Aug 7, 2006 at 6:59 PM
Jeffc your comments are down right ridiculous. You pick and choose statements at your convenience.
Do you really think that an industry enjoying triple and quadruple growth is simply tapping into a needed market segment?
No, their rates of growth are so extreme because they take advantage of people. And they set up shop in low-income neighborhoods and near military bases. Yes, these people need credit. But they also need people they can trust, and you cannot trust a pay day lender to have your best interests in mind. They are there for one reason - to make money. And they are going to make the money from the people they do business with.
No one (read that again) NO ONE is calling for the elimination of pay day loans, especially not in Oregon. This is an industry tatic designed to mis-state the calls for regulation. And you, Jeffc, fit that profile very nicely.
There is consensus that pay day lenders provide a necessary service. Even amongst regulation advocates. HEAR THAT? CONSENSUS. Some lenders even go so far as to say there is nothing new in proposed regulations, that they already agree to them voluntarily. Another lie. If that were the case, then what’s the big deal with making them official?
You, jeffc, obviously have little understanding of the true nature of this kind of lending. And your arguments are so similar to those used by the industry, I question where you got them.
Look, we have Libertarians in Oregon calling for regulation of these loans. LIBERTARIANS! You know there is something wrong then. Oregon has more pay day loan shops than McDonalds. And most of them appeared in the last 5 YEARS. This is not a case of an industry simply trying to get by and being maligned by liberals as you suggest. It is a premediated assult on economic opportunity under the guise of exactly that.
If you can’t see that, you need to do some research.
Posted by ericd on Aug 8, 2006 at 4:58 PM
“Who the heck can be on the side of charging 521 percent interest rates for people that are vulnerable and desperate?”
I am, as someone who wants that vulnerable and desperate person to be able to get money he obviously needs very badly and immediately. If 521 percent is the best deal he can get (and if he could get better then why wouldn’t he?) for money he needs badly and immediately, then all this legislation does is stop him from getting the money he needs.
Exploitation is always the Repuglican way, Who would charge 521% when they could get a thousand, and if he could force them to give free sex in the bargain, hey!... why not. Desperate people (or just ignorant) will do amazing things for folk with a few bucks and no gag reflex.
If you make it so they lose their house to you as well, that is just business, you have expenses after all. They didn’t notice the house part in the fine print? That’s just their lookout, they should have paid more attention to reading classes in school.
After all, if they don’t pay, you don’t send Guido to break their legs, you send the local cops to arrest them for passing bad checks. All above board and legal like.
You could even let them use payday loans for Bolita .. er powerball tickets for that 100 million to one chance of escaping the need of you
Now if we could just pass special laws for specialy licenced brothels and narcotics as well, we could eliminate the specter of organized crime completely, it would just become more business as usual
Posted by FreeDem on Aug 8, 2006 at 7:12 PM
Slavery never really goes away, it just changes forms. The economic one seems to be most popular in the 21st century, at least in the first world, where industries like predatory lending, with it’s addittional soak-the-working-poor components such as title loans, adjustable rate home loans, and all those happy video poker machines in every tavern. To those above who lump it all together in the free market system I would point out, respectfully to their keysian reality tunnels, that the role og gobernment is to make a society that creates the greatest good for the most. Philosophical musings about money lending invariably lead to the historical root of this human misery - a show down in late medival christendom between the franciscans (all money leading is evil) vs. the dominicans (its ok if controlled by the church.) Even revolving credit is a post ww2 phenom in america. People have lots more stuff they don’t really need. What they need is meaningful family wage work!
Posted by oregonacorn on Aug 9, 2006 at 9:10 AM
Just another way to keep the poor poor,and eliminate the middleclass.These lenders are scumbags.
Posted by Kaw Valley Kid on Aug 9, 2006 at 10:18 AM
ugg! get that damn flag off my posts.Being an American is nothing to be proud of these days…
Posted by Kaw Valley Kid on Aug 9, 2006 at 10:19 AM
Wasn’t usury a sin against Christendom once upon a time? How do Republicans make for this distinction?
Posted by rocco on Aug 13, 2006 at 8:50 PM
There were laws against usury not so long ago, till loan sharks bought enough legislators to remove the laws. It took a while longer to make it impossible to escape such usury by bankrupsy.
Posted by FreeDem on Aug 16, 2006 at 3:20 PM
One of the things that the defender of Payday loans overlooked in his utter ridiculous defense post is that like all high risk loans, lower interest payday loans would necessarily be frontloaded. That is they would included all of the interest payments in the first few payments so that only by paying it off in the first or second installment could one save any interest at all. Being poor the borrower would need the entire schedualled life of the loan if not longer. This would ensure that a typical $500.00 loan carrying a 36% APR interest charge would be repaid in full at $680.00 within one month. Banks would be envious to see anyone get such business. I suppose the triple digit interest is paying for a certain number of defaults. Still it is predatory and harmful to society. It perpetuates poverty and most people that use the service use it regularly. A plethora of low wage jobs is the cause of much of the problem. The Payday industry only worsens the problem.
Posted by cabdriverinchicago on Nov 28, 2006 at 12:06 AM
It is important that we all understand a balance of all of the facts, before decisions are made, that effect something of such good use to so many good people.
Read the Blog as follows:
Pay Day Loan Mis-Information
Category: News and Politics
I recently read a Reuters news article, written by Nick Carey, Mar 23rd, 8:15pm ET, titled, “
Posted by bruceberquist on Mar 30, 2008 at 4:07 PM
Page 1 of 1 pages
SAVE 53% OFFTHE NEWSSTAND PRICE!
Reader Comments
“Who the heck can be on the side of charging 521 percent interest rates for people that are vulnerable and desperate?”
I am, as someone who wants that vulnerable and desperate person to be able to get money he obviously needs very badly and immediately. If 521 percent is the best deal he can get (and if he could get better then why wouldn’t he?) for money he needs badly and immediately, then all this legislation does is stop him from getting the money he needs.
Don’t kid yourself into believing this bill protects people from “predatory” lenders (ya know, those lenders that are actually stepping up to the plate and offering these needy people an option). At best, it protects a desperate borrower from himself (if he doesn’t really need the money, it helps him avoid a potentially painful financial transaction), and, at worst, it takes away his best option to get money he deperately needs now.
The borrowers that use “payday” lenders aren’t the kind of people that maintain a line of credit at a bank. These people live paycheck to paycheck. No cash, no food…no cash, no medicine…no “payday” lender, NO CASH.
Look at this example:
You need $200 now. The lender will give it to you for a fee of $20 if you pay back the $200 in one week (with a post-dated check).
Sounds like a pretty good deal for someone who really needs $200 now, huh? Little or no paperwork, no collateral, and walk away with the $200 cash now. All for $20.
I bet there’s plenty of people who, in a pinch, would consider that pretty good terms and would gladly pay it.
What’s the annual interest rate? 520%.
This legislation stops such borrrowers and lenders from entering this mutually beneficial transaction, all so that the masses who don’t need such services can feel like they are helping the people who do need such services. Feel good liberalism once again hurts those it purports to help.
“But if the service is so popular, why did lawmakers nearly fall over themselves to pass the interest cap?”
Duh. Because the service is popular with the small segment of society that needs the service. Obviously, it’s not used by most of the electorate that has, for example, credit card availability, and as such doesn’t need the service.
The legislators are accountable to the electorate as a whole, which is comprised mostly of people that don’t use the service. To the broader electorate, this valuable service can be made to seem like a crime, and they don’t understand the benefits of such a service, so they are against this “punitive” service (an oxymoron if I ever heard one). What does it hurt them to take away this transaction that they have no part in and that is obviously considered mutually beneficial by those parties that do have a part in the transaction? It helps them sleep at night, even as they harm those they think they are helping.
“It’s been very exciting to show Democrats that when you get out there on an economic issue and show that you are on the side of everyday working folks, there’s power in that nexus.”
That should be amended to, “It’s been very exciting to show Democrats that when you get out there on an economic issue and show that you, on the surface anyway, appear to be on the side of everyday working folks, despite the fact that the policies you support, on balance, hurt the very people they were supposed to help, there’s power in that nexus.”
“Politics is about winning.”
Exactly. It’s not about good policy. It’s about winning. The minimum wage and “predatory” lender “victories” are irrefutable evidence of that.
As a group who spends 100% of it’s resources organizing the working poor, ACORN has seen the damage done by predatory lenders. We have worked hard in over a dozen states to bring this to the public eye and help curb the new robber barons of the 21st century.
Good comments by jeffc. And the main argument used by people who are using payday lenders as targets of their “consumer activism” - that payday loans carry outrageous triple-digit interest rates - is in fact invalid. You cannot fairly evaluate a payday loan in terms of an annual percentage rate because of the fixed costs involved in making a loan. If payday lenders were limited to a 36% APR, for example - as they are in many states which have effectively outlawed the practice thereby - then a lender could charge no more than $1.38 for two-week, $100 loan, which obviously nobody can do because the lender’s costs are way higher.
Anti-payday-loan legislation is essentially anti-freedom legislation. The government is essentially making it illegal for one person to say to another, “I will lend you $100 today if you will pay me back $101 tomorrow” (a 365% annual interest rate). Is that the “progressive” result you people want?
If payday lenders are making so much money overcharging poor people for loans and “consumer activists” want to help them, then why don’t they just offer poor people loans for smaller fees - or encourage the government to set up a program to do so? No, instead they want someone to criticize, to complain about triple-digit interest rates and to dishonestly call payday lenders loan sharks when loan sharks are people who use violence to collect on loans which payday lenders certainly do not.
Consumer activism should be about stopping dishonest advertising and practices, not dictating to a business that has not received any government assistance how much it may charge for its product or service. The free market works quite well and will take care of that if allowed to operate freely. Right now people are discouraged from entering the payday loan business because of the libel, slander, and unfair regulations that are being directed at payday lenders. That is what is curtailing the proper operation of the free market and keeping payday loan prices higher than they could be (although at some Internet sites you can get payday loans for as little as $8 or $10 per $100 loaned, which is less than the reform the Oregon group wanted to have people vote for).
Please see the article “In Defense of Payday Lending” by Tom Lehman, Assistant Professor of Economics at Indiana Wesleyan University, at http://www.mises.org/freemarket_detail.asp?control=454
Jeffc your comments are down right ridiculous. You pick and choose statements at your convenience.
Do you really think that an industry enjoying triple and quadruple growth is simply tapping into a needed market segment?
No, their rates of growth are so extreme because they take advantage of people. And they set up shop in low-income neighborhoods and near military bases. Yes, these people need credit. But they also need people they can trust, and you cannot trust a pay day lender to have your best interests in mind. They are there for one reason - to make money. And they are going to make the money from the people they do business with.
No one (read that again) NO ONE is calling for the elimination of pay day loans, especially not in Oregon. This is an industry tatic designed to mis-state the calls for regulation. And you, Jeffc, fit that profile very nicely.
There is consensus that pay day lenders provide a necessary service. Even amongst regulation advocates. HEAR THAT? CONSENSUS. Some lenders even go so far as to say there is nothing new in proposed regulations, that they already agree to them voluntarily. Another lie. If that were the case, then what’s the big deal with making them official?
You, jeffc, obviously have little understanding of the true nature of this kind of lending. And your arguments are so similar to those used by the industry, I question where you got them.
Look, we have Libertarians in Oregon calling for regulation of these loans. LIBERTARIANS! You know there is something wrong then. Oregon has more pay day loan shops than McDonalds. And most of them appeared in the last 5 YEARS. This is not a case of an industry simply trying to get by and being maligned by liberals as you suggest. It is a premediated assult on economic opportunity under the guise of exactly that.
If you can’t see that, you need to do some research.
Exploitation is always the Repuglican way, Who would charge 521% when they could get a thousand, and if he could force them to give free sex in the bargain, hey!... why not. Desperate people (or just ignorant) will do amazing things for folk with a few bucks and no gag reflex.
If you make it so they lose their house to you as well, that is just business, you have expenses after all. They didn’t notice the house part in the fine print? That’s just their lookout, they should have paid more attention to reading classes in school.
After all, if they don’t pay, you don’t send Guido to break their legs, you send the local cops to arrest them for passing bad checks. All above board and legal like.
You could even let them use payday loans for Bolita .. er powerball tickets for that 100 million to one chance of escaping the need of you
Now if we could just pass special laws for specialy licenced brothels and narcotics as well, we could eliminate the specter of organized crime completely, it would just become more business as usual
Slavery never really goes away, it just changes forms. The economic one seems to be most popular in the 21st century, at least in the first world, where industries like predatory lending, with it’s addittional soak-the-working-poor components such as title loans, adjustable rate home loans, and all those happy video poker machines in every tavern. To those above who lump it all together in the free market system I would point out, respectfully to their keysian reality tunnels, that the role og gobernment is to make a society that creates the greatest good for the most. Philosophical musings about money lending invariably lead to the historical root of this human misery - a show down in late medival christendom between the franciscans (all money leading is evil) vs. the dominicans (its ok if controlled by the church.) Even revolving credit is a post ww2 phenom in america. People have lots more stuff they don’t really need. What they need is meaningful family wage work!
Just another way to keep the poor poor,and eliminate the middleclass.These lenders are scumbags.
ugg! get that damn flag off my posts.Being an American is nothing to be proud of these days…
Wasn’t usury a sin against Christendom once upon a time? How do Republicans make for this distinction?
There were laws against usury not so long ago, till loan sharks bought enough legislators to remove the laws. It took a while longer to make it impossible to escape such usury by bankrupsy.
One of the things that the defender of Payday loans overlooked in his utter ridiculous defense post is that like all high risk loans, lower interest payday loans would necessarily be frontloaded. That is they would included all of the interest payments in the first few payments so that only by paying it off in the first or second installment could one save any interest at all. Being poor the borrower would need the entire schedualled life of the loan if not longer. This would ensure that a typical $500.00 loan carrying a 36% APR interest charge would be repaid in full at $680.00 within one month. Banks would be envious to see anyone get such business. I suppose the triple digit interest is paying for a certain number of defaults. Still it is predatory and harmful to society. It perpetuates poverty and most people that use the service use it regularly. A plethora of low wage jobs is the cause of much of the problem. The Payday industry only worsens the problem.
It is important that we all understand a balance of all of the facts, before decisions are made, that effect something of such good use to so many good people.
Read the Blog as follows:
Pay Day Loan Mis-Information
Category: News and Politics
I recently read a Reuters news article, written by Nick Carey, Mar 23rd, 8:15pm ET, titled, “
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