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Swimming Against the Loan Sharks


#1

Swimming Against the Loan Sharks

Liz Ryan Murray

Federal regulators have proposed new rules to rein in payday lenders, and those of us who’ve been fighting these legalized loan sharks for years are bracing for a major backlash from the industry while also pushing for tougher standards.

Issued by the Consumer Financial Protection Bureau (CFPB), the proposal comes after years of grass roots pressure – in the face of nasty opposition by loan predators.


#3

At this point hasn't the entire Financial Industry been given license to charge rates that would have gotten a Loan Shark busted before Deregulation?

Not to mention that these same banks can give you .05% interest on your savings while charging 29% on what they loan you.

That is Charging us 580x more on interest for loans than the interest they are Paying us on the money we give to them, as savings.

And we're supposed to want more of the same from our next President?

We sure as hell need an economy that works for all of Us, not just the Billionaires.


#4

How much moral distance is there between the Mafia Strongmen who kneecaps the shopkeeper who won't pay out "Protection Money," and the type of mind that recognizes how profitable it is to take advantage of society's most desperate members? I'm talking about these payday mercenaries.

As Ralph Nader and others have pointed out, it's time for postal banking. While this would not alleviate the need for loan-granters, it would make many monetary transactions more affordable.

Second, I think of a group in India that set up a network of MICRO-LOANS. In this system, if a woman needed $25 to buy a loom so that she could make sewn products to feed her family, instead of paying to lease the equipment, she would soon own it.

THAT is how loaning can serve a positive function if it's predecated on the wish to lift others and show basic humane considerations. But the predatory loan-makers are an EVIL lot as are their more sophisticated "financial relatives," the Hedge Fund makers. Look at what they've done to Puerto Rico... turning it into a larger version of Flint, Michigan.

And their cousins in $2000 suits, the European Central Bankers have likewise utilized a similar system of usury (and privation) to turn all of Greece into a financially crippled vassal state.

Power executed by military muscle coupled with power instituted through monetary means together make for all the evils generated by absolute power corrupting absolutely. The results BLEED out all over the world.


#5

Before addressing the payday loan issue we need to review the genesis of the payday loan industry.

Postal banking was abolished in the late sixties and usury laws that limited interest to 10% became one of the early casualties of financial sector decriminalization (media calls it deregulation) that by the end of the twentieth century had killed most New Deal financial industry regulations.

The payday loan industry was born to fill the void.

Until Postal banking and New Deal financial industry regulations are restored, any effort to reform the payday loan industry will be akin to playing an eternal shell game that the 1% always wins and the 99% always loses.

Don't expect Clinton or Trump to even consider payday loans an issue in the general election.


#6

Bernie Sanders has proposed bringing back postal banking to the U. S. for low-income Americans. Wasserman-Schultz is in bed with the payday lenders. Now please tell me how DWS along with her patron Hillary are in any way progressive? #NeverHillary. Jill Stein 2016!


#7

Brilliant idea, the taxpayer will then be on the hook for those "four out of five" loans that keep getting renewed.

They are called payday loans for a reason.


#8

The article talks about the primary reason those loans don't get repaid, the interest rate is usually so high that people can never catch up and they get caught in a debt death-spiral. If the post office made loans based on ability to repay (which the payday loan sharks deliberately don't do) at or near the prime interest rate, of no more than say $5,000, I'm willing to bet that most of those small loans would be repaid. The Postal Service would do it as a service to make a small return - they don't have to answer to stockholders or greedy owners. They belong to us.


#9

Actually if the loan gets paid off when it's supposed to it is fine. Fees are like 10%.

These are supposed to be unsecured short term loans. Like "Oh crap i just paid my rent and need to fix my car, $500 which i'll have by Fri when i get paid"

The postal service, or anyone else for that matter, will have the same problem. If the risk would be low, major credit card issuers would trip overveach other to fill this particular niche.

Advantage of having the USPS handle this, is they would use taxpayer money which nobody cares about. Kinda like student loans.


#10

The point is that the lenders deliberately give loans to people they know can't make the principle payments on time. Just like rip-off used car dealer J. D. Byrider cheats poor people on car deals. They never put a price on the cars. They find out the finances of the person shopping for a car and price the car just high enough that the buyer might very well not be able to afford the payments, so they can then repossess the car a few months later and resell it again. Oh, and if you were to walk into one of their dealerships and offer them cash for a car they wouldn't sell it to you. There's no money in that! Being poor in this country is a total racket for the vulture finance industry.


#11

You compare the Post Office returning to what was considered standard banking functions such as offering short term loans with Loan Sharking? Loan Sharking is a risk? What risk? It's an operation that's so successful it spends millions lobbying Congress to maintain its 'business practices'. Law after law allowing private banks, lenders and collectors of all types to make out like the bandits they are, while having borrowers walk through a minefield.

And your concerns about taxpayers. If that's so, then you certainly can't complain about taxpayers having national health care for far less than what taxpayers are subjected to now, as well as having it guaranteed. Also having free higher education. Actually we do pay for the education, we just won't subsidize and bailout the financial bandits.


#12

You got it! They give loans to people who can't pay them back. Now why would the USPS give a loan to the same person?


#13

Don't have a problem with the USPS makin some extra cash (they were pretty much shafted by the government with that pension funding scam). My problem is the USPS giving unsecured loans and backin those loans with taxpayer funds.


#14

Nobody said the loans would be unsecured. From the descriptions I've read about Sanders' proposal, the postal banking system would operate the way small-town banking used to operate for decades and decades, successfully, if in a boring and low-return manner.