Payday Loans Are Dead! Long Live Payday Loans!

In yet another example of finance double-speak, major financial players have moved into that netherworld of the functional equivalent of loansharking known as payday lending.

While in theory short-term loans can be a boon to cash-strapped individuals, in practice, the usurious interest of payday loans result in many borrowers falling into a debt treadmill. The Pentagon was so concerned about the way that payday lending could wreak havoc with the lives of combat personnel that it restricted the rates that could be charged to military personnel to 36%. The industry howled that rules would drive payday lenders out of the business of serving the armed forces (they had previously been targeting bases). I suspect that result was a feature, not a bug.

In 2008, the Wall Street Journal reported on how payday lenders targeted the elderly. This extract gives you some insight into the business model:

The crowd represents the newest twist for a fast-growing industry — lenders that make high-interest loans, often called “payday” loans, that are secured by upcoming paychecks. Such lenders are increasingly targeting recipients of Social Security and other government benefits, including disability and veteran’s benefits. “These people always get paid, rain or shine,” says William Harrod, a former manager of payday loan stores in suburban Virginia and Washington, D.C. Government beneficiaries “will always have money, every 30 days.”

The law bars the government from sending a recipient’s benefits directly to lenders. But many of these lenders are forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts. The banks immediately transfer government funds to the lenders. The lender then subtracts debt repayments, plus fees and interest, before giving the recipients a dime.

As a result, these lenders, which pitch loans with effective annual interest as high as 400% or more, can gain almost total control over Social Security recipients’ finances….

An analysis of data from the U.S. Department of Housing and Urban Development shows many payday lenders are clustered around government-subsidized housing for seniors and the disabled…

But some industry critics say fixed-income borrowers are not only more reliable, they are also more lucrative. Often elderly or disabled, they are typically dependent on smaller fixed incomes and are rarely able to pay off their loans quickly. “It’s not like they can work more hours,” says David Rothstein, an analyst at Policy Matters Ohio, an economic research group in Cleveland. “They’re trapped.”

The latest sighting, via the Associated Press (hat tip April Charney) is that bigger, more reputable-looking banks are offering payday loans, but predictably calling them something else, in much the way that the term “escort service” is meant to imply something more refined than “prostitution”. From the Clarion Ledger:

Perhaps muttering, if you can’t beat ’em, join ’em, big banks are now aping the payday lending industry and offering short-term loans at rates that once were called usurious.

The banks are not calling them payday loans and say there are safeguards that distinguish them from payday loans. But, it’s still a short-term note. Wells Fargo, for example, offers its loans for direct deposit customers. As The Associated Press has reported, it says customers can only borrow up to half their direct deposit amount or $500, whichever is less. Its fees are cheaper too, at $7.50 for every $100 borrowed.

That still amounts to a 261 percent annualized interest rate over the typical pay cycle. The amount of the advance and the fee are automatically deducted from the next direct deposit.

The article does point out that Mississippi has put restrictions on payday loans. The maximum loan is $400 and the charges are limited to an equivalent of an interest rate of 572% a year. Since there appears to be no restriction on how many loans a consumer can have at any time, this legislation doesn’t cut it as a fig leaf.

If you watched Congresscritters grilling Elizabeth Warren in July, several pressed her on whether she would use the CFPB’s power to ban products. She ducked the question. There is something very diseased in our society when a public official can’t cite the Pentagon’s stance and say there are interest rates that are intrinsically damaging to consumers and therefore should not be permitted. A loan with an effective annual interest rate of over 50% is the financial version of an exploding toaster.

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74 comments

  1. Rapid Limburger

    I am heartened to realize that seniors will be losing their social security. One way or another we need to take it from them. The continued success of the U.S. economy depends on it.

    1. ginnie nyc

      An adjunct to banks’ payday loan-sharking is their control of welfare benefits. For example, New York State issues a benefits card holding monthly food stamp and cash payments. If a problem arises, the number you call is actually a division of JP Morgan/Chase.

      The cash award (maximum $64 and change for a single person) can only be accessed through a bank ATM. (Of course, the ATM never gave you the change, which was lost.) Thus, many “unbanked” benefit recipients are forced to go to corner payday loan stores and pay the fee in order to get their money. You see who benfits here.

      When I was fortunate enough to receive a cash benefit, I researched the fee structure for all payday lenders in Harlem. There was one store that charged only $2.00. So I waited every two months to pull out the cash, to lower the hit. Not everyone can wait. Naturally, later in the year, that particular store went out of business.

  2. F. Beard

    So-called “credit” strikes again. Whether the “loans” are high interest or low interest they drive up prices and require many to borrow who otherwise would not have to. It is a classic Tragedy of the Commons situation.

    Banks should have absolutely NO government privilege including the Fed, legal tender laws for private debt, the capital gains tax (which is measured in Federal Reserve Notes), etc.

    What is “free market” about a government enforced and backed money monopoly for private debts?

    If we are going to fight the banks, let’s go for the jugular and not piddle around with attempting to regulate an inherently dishonest business.

    1. bmeisen

      Are you suggesting a pure barter economy without money or government, just a (virtuous?) collection of neighbors who are gun-toting militia members on the weekends? Would you even have weekends? What’s the need for a calendar? The local market takes place after you sleep 5 times, the big market happens down at the river crossing ever new moon!

      1. F. Beard

        Oh, so the only choices are a fundamentally crooked money system or barter?

        What about common stock as a private money form EXCEPT that it would share wealth rather than steal it?

        1. justanobserver

          so you want to make the stock of our good friends the immortal, psycopathic corporations the bedrock of our financial system ?

          i’m really don’t get that at all.

          1. F. Beard

            so you want to make the stock of our good friends the immortal, psycopathic corporations the bedrock of our financial system ? justanobserver

            I would not “make” anything the bedrock of our financial system. The private sector is fully capable of coming up with any number of money systems without any coercion. But I do note that common stock seems to be ideal money form based on the concept of “sharing” and democracy.

          2. Skippy

            @beard…*Private sector* is code for Russel 2000, the rest is just a well of souls, potential $$$ persons $$$, see SCOTUS. So…you are advocating company store practices as the commons have zero leverage to bargain with, negotiation is a power relationship…eh.

            Skippy…stealing (fiat) or slavery (lack of voice)….ummm…hard choices.

          3. F. Beard

            So…you are advocating company store practices as the commons have zero leverage to bargain with, negotiation is a power relationship…eh. skippy

            There is a huge difference between store coupons as money and common stock as money. The latter is a legal “share” in the assets of the corporation and conveys voting rights in it.

            IF there was no government backed counterfeiting cartel, the banking system, to borrow from then corporations might easily be forced by competitive pressure to use their common stock as money thus sharing wealth and power instead of concentrating them.

          4. Skippy

            Beard, where in the last XXX hundred years of capitalism or trading do you find any data to substantiate your ideas, when all the evidence is contrary too it.

            Skippy…imperfect as today is, going backwards is worse, as what you describe is the mechanism the United Company of Merchants of England Trading to the East Indie eventually used to sway the UK government. Corporations need to get their mits out of government, not increase it, SCOTUS.

          5. F. Beard

            imperfect as today is, going backwards is worse, as what you describe is the mechanism the United Company of Merchants of England Trading to the East Indie eventually used to sway the UK government. skippy

            What I advocate is separate government and private money supplies per Matthew 22:16-22. Government money would be pure fiat issued without borrowing. Private money would be totally unrecognized by government.

            It is the combination of private corporations and a fascist money system that is so destructive. Without the government backed counterfeiting cartel to borrow from, corporations would have to “share” wealth rather than steal it.

          6. Skippy

            Beard, it didn’t work, hence the jubilees, come on now. That world has come and gone in so many ways its ludicrous to compare. As far as ethics go the bible is the last place I would seek, the contradictions and hypocrisy are staggering, chosen people thingy. Next you have a few monarchs priests running the show in the name of some invisible deity. As a citizen you can’t even have a day in court against said deity except via its self proclaimed proxies.

            Yes monies are a coercive tool, so its a question of whom wields it, and as much as I disagree with the way government is handling things, too much private sector interference. I would never hand it over completely to the private sector. Seriously I cannot fathom how people conflate the issue, bad government vs good private sector, when it is painfully obvious which is the actuator when politicians are funded (bought and payed for) by the private sector. Hell as taxation is the most powerful coercive tool the government has, you would allow the private sector to compete for it, look what they have done via intermediary’s…cough lobbying…at arms reach.

            Skippy…no wonder most of the powerful wrap them selves in it…cough…GOP / Kochs / Blue Dogs / et al. The religious osmosis in Americas 200+ years is breath taking…eh.

            PS. the more I hear your thoughts, answer questions, the more suspicious I become of your underlying ideology. Might I add that one book, a compilation of story’s over a very long time, constantly fiddle with, used to justify some of humanity’s greatest crimes, is a poor data point to base ones thesis upon. Be well.

          7. F. Beard

            Beard, it didn’t work, hence the jubilees, come on now. skippy

            Common stock as money requires no borrowing hence there is no need ever for jubilees. Common stock is what it is, a share in the assets of the corporation.

            As far as ethics go the bible is the last place I would seek, the contradictions and hypocrisy are staggering, chosen people thingy. skippy

            There are apparent contradictions but further reading resolves them. As for the Hebrews being chosen, Abraham was quite a man – brave, loyal, faithful, and generous.

            [snip]

            I would never hand it over completely to the private sector. skippy

            What are you talking about? Government would still create, spend and tax its own fiat. Private monies would ONLY be good for private debts.

            PS. the more I hear your thoughts, answer questions, the more suspicious I become of your underlying ideology. skippy

            I am an anti-fascist. I believe in liberty both economic and personal. But I also believe in restitution for the victims of the fascist money system.

          8. Skippy

            Beard, with all do respect, historically what you describe is rubbish. Go read Graeber’s book or get access to raw data, what you describe is a coupon and not legal tender, hell I could start up a company and exchange piles of these coupons for services, commodity’s, value added product and then close up shop. How would exchanges facilitate such actions, FX markets, the list is endless, absolute chaos. Yet your offerings are plated like some kind of stability, encouraging social stability, a construct by where individuals are forced by (economic rationalism) to act in good stead.

            BTW all human religions die, it is a part of the historical record, belief is a MOFO, rapped with impunity at the event horizon, zero reserve fiat is a belief in accountancy, MMT vs. a creator, whats the difference.

            Skippy…what you describe is lawlessness in favor of corporatism writ large. Reclaim your governance, make it work for the betterment of all, including all life going forward…eh.

          9. F. Beard

            what you describe is a coupon and not legal tender, skippy

            There should be no such thing as legal tender for private debts. Legal tender laws should only apply to government debts.

            hell I could start up a company and exchange piles of these coupons for services, … skippy

            1) For anyone to accept your common stock money you would have to have unencumbered real assets backing it.

            2) If you had 51% of the stock and decided to close shop, the other money holders would get 49% of the assets in accord with the fact that they owned 49% of the common stock.

            I have David Graeber’s book and have started reading it.

    2. decora

      f. beard, you post exactly the same thing in every thread, over and over again. i mean, are there any problems you think that the Gold Standard can’t solve? how about abortion? would getting off of the ‘fractional reserve’ system solve abortion?

      1. F. Beard

        , you post exactly the same thing in every thread, over and over again. i mean, are there any problems you think that the Gold Standard can’t solve? decora

        Gold Standard? Are you out of your mind? A Gold Standard is something I would NEVER advocate.

        would getting off of the ‘fractional reserve’ system solve abortion? decora

        The thieving money system is the root of all sorts of evil. Usury alone is bad enough; usury plus counterfeiting is an abomination, imo.

        I see I must continue my efforts to educate.

        As for you, D-. :)

  3. bmeisen

    Doesn’t this put another nail in the coffin of checking. Checking accounts are used as payday loans by the poor. The fees for bounced checks produce ample income for banks, enough to justify continuing the “service”, but the fees are not deliciously gouging, not truly satisfying to the lamprey who is your standard TBTF banker. They’re interest-free and therefore doomed. Direct deposit and then payday loans are the end of checking.

    1. LeeAnne

      and doesn’t the ‘shock’ of the Post Office possibly shutting down sound just a little bit like “terror” to force Direct Deposit on hold outs?

      1. bmeisen

        Not just the post office – Cantor, Ryan, Boner want to tank the whole government so they can tell the last one out to turn off the lights and run that program that direct deposits all benefits payments, a huge portion of which will by that time be in complete control of da boyz, that swarm of leech-like bipedes. They’re out there doing lunch in the foodcourt dreaming up new names for the investment opportunities that they concoct out of the mez tranches of payday-loan CDOs. When they say that returns of up to 400% are possible they aren’t joking!!

        1. bmeisen

          Yves, in all seriousness: could there be a thing like a PLBS? A Payday Loan Backed Security? With Senior, Super-Senior, Mez Tranches?

        2. Maximilien

          It’s coming….. the cashless society. They who control the computers will control the cash will control…..us. Want proof? Just try to rent an apartment, lease a car, or get a hotel room without a bank account and/or a credit card. Only a person of dubious character would prefer to pay in cash; ergo, one must prove one’s respectability by having both.

          I don’t know about the various states, but here in B.C. Canada we can no longer pay either our electric or phone bills in cash. Now it’s payment at a bank (for a fee), cheque, on-line payment, or direct withdrawal from your bank account. Sorry valued customer, cash is no longer legal tender. We’re sure you’ll understand.

          But (as an executive of our electric utility admitted in an interview) if you’ve been running a grow-op and stealing electricity, come on down to our office with some cash and we’ll grant you amnesty. No questions asked. In your case, because you’re a criminal, cash IS legal tender. How else may we help you?

  4. Linus Huber

    I feel disgusted when reading how banks make indecent money from the weakest section of the population.

  5. William Wallace

    I was involved with litigation in Georgia many years ago against the payday lenders. A general actually testified that the payday lenders were destroying our military and thier ability to fight wars, so the legislators made laws against those guys. All the way the loan sharks said the big boy banks were just trying to push them out so they could take over, well here we are. How long before a GENERAL of the army comes out and says wells fargo short term loans are destroying our military and our ability to fight wars? LOL!

    1. alex

      But generals, and military officers in general, are known left wing fanatics. Think about it. They’re government employees, get universal healthcare, and are apparently more concerned with national defense than with the God given right (enshrined in our Constitution in invisible ink) for the finance sector to fleece as much money as possible. Anything else is downright un-American. I’m not calling generals a bunch of commies or anything, but …

      1. Dan

        I am not sure what military circles you spend your time in, but my experience with military personnel is that they are not by any means of the liberal persuasion.

  6. Matt

    The realities of check cashing stores, 10 percent fee for a personal check, 3 percent fee for a payroll or gov. check. The banks charge a fee for cashing a check drawn on their bank when you dont have an account with them. Maybe that is the next profit center for higher margins.

  7. Philip Pilkington

    Microbubble… Woooo!

    I’m getting the impression that our economies are changing from ones that grow but in which bubbles form to stagnant ones that essentially surf along on froth.

    Almost sounds aesthetically pleasing but then you recall that this froth is made up of working people — or, should I say, ex-working people?

  8. craazyman

    The Borg

    I still have a small checking account at Citibank, I’m a litle embarrased to admit that, but I only keep a bout 2G in it at any given time, just to pay my modest rent in my modest life. I have my millions (ha ha, sure) at Schwab, hoping for the ten bagger so I can ascend like some sky God.

    I could ascend with nothing, but I’m not that good at flying. Anyway, there’s always about 10 people in the lobby, one greeter, one woman behind the help desk, the branch manager, a few customer service reps — all mostly in their 20s or early 30s.

    Citibank must train them to be aggressively friendly. They say “hello sir” the moment you walk in. Ask if they can help you. Smile. Thank you for being alive, almost. Actually, they are hard not to like, and they are impossible to scorn as footsoliders of the banksters. They’re too innoncent for that, and too naive. And whenver I’ve had a small problem, like chasing down a check record from a year ago, they’re right there to help. Even though I’m just chump change and this is mid-town Manhattan.

    There’s one dude who forced his business card on me in case I needed any sort of financial services like a mortgage. I told him I don’t but he smile and stuck it at me like a gun, anywyay, I could feel his aggression, ambition, determination, rushin at me like a fist with a smile. Not that he wanted to perpetrate violence on me, but simply that his lust for whatever business I might offer him, as a rep of the bank, was nearly violent at a aura-vibrational level.

    All these folks, these kids, believe. They believe up and down, that they are serving people. And they are to a point.

    I’m sure if I were a military guy paycheck to paycheck, or a senior on a fixed goverement income, rather than a cheap white collar dude who knows enough to save his money, aggressively, they’d be the same. The same friendly fist coming at you like a punch, partly born of a saintly helpfullness and part borne of the unthinking and mindless obediance to the operating system that animates their ability to survive.

    It’s the borg army of the work of the Lord of the Dollar, and they are trained very well it seems to me. Most of us are soldiers in that army, to varying degrees. It’s hell to be a martyr and heaven is so abstract a concept. So you convince yourself that you’re there to help. Even if the inerest rate is 560%. Who wants to count that high? It’s best just to do your job, you know how it is. ecce homo

    1. gs_runsthiscountry

      Many of those tellers, and personal bankers, are in fact college students. I know many and have talked to them about what they deal with. I can tell you this, they don’t think too much of banks. You in fact met the face-to-face crowd, however, when you talk to a few college students that work in the call centers of these banks you will be amazed how hardened a 20 yr old can be. 50% of their time is spent reversing fees for the people trying to run a negative balance (intentionally) and the other half is spent fending off their high pressure sales manager threatening their job if they don’t make selling numbers. Can you imagine trying to make your sales numbers or sell additional products, when the bulk of your callers are broke?

      I used to think everyone should be a bartender or waiter/waitress once in their life to know what real work is, before they venture off into whatever career they are headed to. Now I wonder if people shouldn’t do a stint as a call center person at a bank. These kids are on the verge of metal breakdown after doing these jobs for 6 months. The pressure of sales quotas coming from the top with the emotional pleas from customers of all ages and walks of life, in tears on the phone, to reverse they 4 over draft fees because they are broke. There needs to be emotional hazard pay above and beyond the 11.50 and hour they get paid. All this, so they can have money for the incidentals in life and pay for that $265 text book for the next class.

        1. Maximilien

          I like “metal breakdown”. Metal breakdown = metal fatigue. Nice concrete metaphor. Bend….bend….bend….and then….SNAP!!

      1. craazyman

        Yo, I hear you. I worked as bank teller one summer in college. This was back in about 1979. In those days it wasn’t too bad. I worked construction the next 2 summers to make more money. I made $5 an hour then and thought I was rich.

        The worst at the bank was getting verbally abused by the old ladies, who came in an wanted something that they couldn’t explain, and you’d look at them, confused, and they’d start shaking with anger, curse you to your face, and ask for the manager.

        the manager was pretty cool. A somewhat hot woman from Venezuela, and she knew a pyscho old lady when she saw one.

        There was an Indian guy, from India, who was on the teller team. He was a good dude. And when the manager came in one day with her hair cut very short, he said to here “Well, you sure did get your money’s worth” in his Indian accent.

        I don’t think anyone laughed outloud, but inside we were crakcing up. It wasn’t a bad or evil place. It was what it should be like, when things are built on a human scale.

        1. Heavy Water

          Ah memories, too bad we didn’t live in the 1930s, John Dillinger, Communists, riots.

          “President Franklin Delano Roosevelt ordered all banks across the country to lock their doors while it could be determined which ones were strong enough to reopen and to restore bank customers’ faith. “

          1. craazyman

            LOL. Yeah my experience was pretty gentle stuff. The way it should be, when most people are mostly sane. :)

    2. decora

      its not really that they believe, its just that the bank measures their ‘performance’ and if they dont make numbers they get fired. as you can read below, tellers (call center reps = tellers) have sales quotas. if they dont meet it, they are gone. there are also ‘mystery shoppers’ that corporate sends in. if the teller doesnt make a good checklist score, they are gone.

      its not about belief. its about survival. i can guarantee you that a lot of tellers understand perfectly well that the institution they work for has some very evil tendencies. thats why some of them stay low in the hirearchy – they don’t want to become like their own managers, or have to drink the amount of kool-aid that is required to move up the ladder.

      when unemployment is 9% (or 20% or whatever real number you want to use in your area/demographic), and you apply for 35 jobs, and only the bank says ‘yes’, you just go and you do what they say. or if you have been working minimum wage for 5 years and the bank wants you, you go, because now maybe you can buy your kid clothes or glasses or braces or whatever. the bank might have health care… a lot of companies dont. your husband has a heart condition. do you work for the bank or for mcdonalds?

      ‘oh sorry, sweetheart, i let you die because i didnt want to work for a corrupt bankster. instead i went to work at the Chicken Hut with no health insurance’.

      it has nothing to do with ‘belief’. its just pure survival.

  9. Norman

    It’s a shame that it’s going to take exactly what transpired in Iraq & in Libya to the infrastructure to loosen the stranglehold that the plutocracy has on the people. The perps will walk away with the gold, leaving behind the ruins, but you can rest assure that the T.B.T.F.’s will be only too glad to help out with a supply of $$$$$. Is this capitalism at its best?

  10. attempter

    The Pentagon was so concerned about the way that payday lending could wreak havoc with the lives of combat personnel that it restricted the rates that could be charged to military personnel to 36%.

    Combat personnel and anyone who claims to care about them might want to observe that the Pentagon could easily make zero-interest loans to these personnel itself, if it actually valued them. Anyone who supports the troops would be on board with this, right?

    1. F. Beard

      Pentagon could easily make zero-interest loans to these personnel itself, if it actually valued them. attempter

      Excellent idea! But then the military would have an incentive to make the troops debt-slaves to force them to re-enlist.

      I think we should just dump the whole concept of “credit”. It is only a means by which we steal from each other with some getting to steal much more than others.

  11. Oy

    During a break in my career I worked as a tax preparer. I quit, despite needing the money. I couldn’t stand their business model of gouging their customers with their usurious refund anticipation loans which are analagous to payday loans. I don’t know how the banksters sleep at night.

  12. Ed98763

    “Often elderly or disabled…..they’re trapped”

    “The banks are not calling them payday loans and say there are safeguards that distinguish them from payday loans”

    Pilkington: “I don’t want to make it out that they’re all engaged in fraud — I don’t believe that”

    Das: “It’s silly to think that everybody in finance is ‘evil’ or engaged in fraud”

  13. Knickle and Dimed

    See “Maxed Out” featuring Liz Warren. This really is nothing new in the ghetto, nothing new at all. These places need to be banned. They won’t be saying they do “God’s work”, but they’ll say they provide an important service to the hood.
    Next door is the liquor store, where the clerk, also behind bullet proof glass, will provide hooch.

  14. John Zelnicker

    Yves —

    “A loan with an effective annual interest rate of over 50% is the financial version of an exploding toaster.”

    Actually, it’s closer to indentured servitude.

  15. Jackie Draper

    Pay day loans are nothing new in the ghetto. Right next to the liquor store and the bullet proof glass. “Maxed Out” featuring Liz Warren

  16. hello

    to be “fair,” the Big Banks have had payday loans for a long time—just wrapped in jargon called NSF.

    Calling themselves pay-day lenders was just too downmarket for the likes of Dimon.

  17. Howard K

    The big banks, especially Wells Fargo, has been in this business for years but sorta indirectly. Several of the big players in payday loans are public companies. Where do you think they are getting their capital and credit? What I really love is we gave these banks TARP funds, so the taxpayer money gets recycled back to people in the form of super-high interest loans. Nice.

  18. gs_runsthiscountry

    There are options for people, they don’t have to go to a payday loan center[sarcasm]. Here is Credit card marketer that was happy with a 2% response rate to their direct marketing.

    http://tinyurl.com/y8bo4jf

    2% response rate should tell everyone financial education in this country is sorely lacking.

  19. PQS

    How long before some enterprising NGO sets up shop in urban American to make small, no-interest start up loans to the working poor? Sort of like micro loans in the third world. Americans everywhere would be so proud to see that, I’m sure.

    We already have charity medical services serving the overwhelming demand for medical tests, dental work, etc. Remote Area Medical is doing great work in this area, but they started out in Central America and have found the demand in Los Angeles, rural America, and elsewhere inside the Greatest Country in The World to be great enough for their services. Good times.

      1. Sufferin' Succotash

        “microfinance in pursuit of profits has led some microcredit companies around the world to extend loans to poor villagers at exorbitant interest rates and without enough regard for their ability to repay.”

        Sorta falls into the “Quelle Surprise” category, don’t it?

        1. PQS

          Yes and Yes.

          So I suppose what you and DH above are indicated that perhaps we already have microloan mechanisms here. Shhh, don’t tell the banksters. They’ll want to apply for non-profit status…

  20. Jean

    For a decent people, a reasonable people, a moral people, there would be no debate on this issue. As a nation, a culture, we are lost.

  21. Shankara

    Brothers and sisters…
    the endless catalogue of bestial atrocities
    which will inevitably ensue from this appalling act
    must, can, and will be terminated.
    The forces of darkness and treasonable maggots
    who collaborate with them, must, can, and will
    be wiped from the face of the earth.
    We must crush them.
    We must smash them.
    We must stamp them out.
    We, the people of Oceania…

    Oh, sorry, that’s fiction. In real life, we’re nothing more than underlying collateral for their securitization structures. Resistance is futile. Pay the man, it’s the first of the month. Shake down the couch cushions, food is up again. Oil is falling but doesn’t trickle down. Take it to the streets and meet the wrong end of a taser and night stick. Change we can bereave in.

  22. grrace

    Everytime I think, things are going to get better, I read something like this article. THIS LOANSHARKING SHOULD BE ILLEGAL!!! We must find a way to stop them. I hear peer to peer lending is on the rise.

    1. patrick

      If your name ends with a vowel and you extend the loan from a shop front bar it’s called racketeering. If your name ends in loan and you extend the loan from the store front next to the bar it’s called finance. So, apart from the brutality of the collection service, whats the difference?

  23. Eric

    My experience with payday customers comes from working in a counselling program at church. The common perception that borrowers do not understand the fee structure is mostly incorrect. Don’t get me wrong; I think these are unjustifiably high charges, but nearly all such customers that I have been exposed to understand what they are paying. I guess I had expected to be dealing with easily fooled or confused customers, but that hasn’t been my experience. Rather, they are desperate. A second “trend” is that a pretty high proportion of elderly folks coming to us that are on the payday loan-benefits check treadmill are doing so under the influence of younger family members who are effectively out to capture the SS check, but need it now, not next month.

    1. F. Beard

      Our money system is worse than usury; it is based on usury collected for counterfeit money – so-called “credit”.

  24. steelhead23

    They sometimes call a president’s podium the “bully pulpit.” What is needed here aren’t laws and regulations, we need a civil leader willing to use the bully pulpit to rail against such foolishness as borrowing money for unneeded consumables, to extol the virtues of thrift and budgeting, to encourage Americans to be free by being debt free. Hucksters have been selling Americans the view that “savers are suckers”, as leverage can open the door to creating wealth. Sure, leverage can increase profit – it can also increase losses – but when borrowing for consumables, it is always and forever a loser. The winners are the lenders, who get your car or garnish your wages if you cannot pay their usurious rates.

    1. F. Beard

      Sure, leverage can increase profit – it can also increase losses – but when borrowing for consumables, it is always and forever a loser. steelhead23

      Ah, so only business should be allowed to steal via so-called “credit” creation? So business can continue to automate and outsource their workers’ jobs away with their own stolen purchasing power?

      Wake up! The US needs a government enforced private money monopoly like we need a hole in the head.

      1. steelhead23

        I have no idea what you are railing against. Yes, banks create money into existence by fractional reserve lending. Whether or not fractional reserve lending is in the public interest is an interesting question, but it has almost nothing to do with the question of whether governments should set limits on the rates banks can charge their customers. I am not against such regulation at all, I simply want to point out that it isn’t just Liz Warren who has been silent on the question – never in my lifetime has a president stood before the public and encouraged thrift. Never. Why not?

        1. Because

          Ending Fractional Reserve Banking is the stake through the heart of capitalism. I remember reading during the populist/socialist movements in the 1890’s, what they wanted to do first.

          I think it was quite unified in that agreement.

          1. F. Beard

            Ending Fractional Reserve Banking is the stake through the heart of capitalism. Because

            I would say it would be a stake through the heart of fascism.

    2. Bank of Murica

      “borrowing money for unneeded consumables”
      The folk “borrow” to pay for emergency health care, housing, food. You must be talkin about actual borrowing. which is different from theft. This is what Banks did, also, they assumed they could never lose. They’re dead wrong.

  25. Bubba

    In addition having payday lenders in Georgia, we also have automobile title lenders which permit us to pawn our automobiles at interest rates of 240%. Is this system available in other states?

  26. deviceforseeing

    This is pretty funny. The Pentagon is sore because usurious low life is cannibalizing their canon fodder before they can even be deployed to one of the Empire’s war zones.

  27. RebelEconomist

    Yves, you are guilty of the most brazen hypocrisy. As I look at this post in the UK, there is an advert for what appears to be a payday loan company (“Kwik Cash”, to be precise) right beside it. I have mentioned this to you before, so there is no excuse. You either need to stop pretending that you are some kind of campaigner in favour of more responsible finance, or stop lining your pockets by allowing the advertising space on your blog to be sold to the highest bidder including such firms.

  28. payday loans

    Wow, incredible weblog layout! How long have you ever been running a blog for? you make blogging glance easy. The entire glance of your site is great, as neatly as the content material!

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