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1. Because the industry lobbied heavily for the CFPB and others to be neutered 2. There is demand for short term cash. But not for usurious loan sharking that h
by nimish 8y ago
1. Because the industry lobbied heavily for the CFPB and others to be neutered
2. There is demand for short term cash. But not for usurious loan sharking that has deep social consequences.
Many of the "services" provided here are predatory rather than rehabilitative and it's entirely possible to have the latter without the former, ideally via something like a post office bank.
That the firms are profitable is secondary to whether it's a useful social good.
- whatok 8y agoWhat's the right price for short-term cash not secured by any assets for a customer who does not have any record of displaying creditworthiness?
- nimish 8y agoCertainly not bankruptcy or the use of public resources like courts to collect debts Predatory lending relies on an uninformed target.
- whatok 8y agoThat doesn't answer my question at all.
- nimish 8y agoIt does. The fair price of the loan is the price that doesn't cause social harm. The lender figures out how to translate that into APRs and possibly turn a profit, or perhaps there's no price that's profitable and socially good. That's perfectly fine.
- frgtpsswrdlame 8y agoIn a competitive market the right price would be one which generates a positive but very tiny profit. These big payday lenders make money hand over fist though.
- whatok 8y agoI agree with your first statement but do not have any aggregate numbers to argue against the second. Do you have any?
- vageli 8y ago> In a competitive market the right price would be one which generates a positive but very tiny profit. These big payday lenders make money hand over fist though. Is this not an inversion of the risk associated with these loans? It was my understanding that riskier loans are assessed at higher rates of interest _because of_ the likelihood of default. Thus, extract as much as quickly as possible before the default. How would companies profit if the successfully serviced loans did not offset the defaults, given these loans are not secured with another asset?
- ikeboy 8y agoWhy isn't the market competitive, then?
- mbesto 8y ago> it's entirely possible to have the latter without the former, ideally via something like a post office bank. If it's possible, there's money to be made, and we live in the capitalist society I know exists in the US - how come you don't see it happening then? I would like to think if the market were truly that way then you would see it happening.
- s73v3r_ 8y agoBecause there's more money to be made in screwing poor people. Just because something can make money doesn't mean anyone would be interested or have the resources to do it, especially when there's an alternative that makes more money.
- throwaway-hn123 8y agoCunt.