7 ms·

Restructuring arbitration for neutrality and thus cannibalizing arbitration as an industry seems like a fine outcome to me. Feels a bit like the payday loan ind

Restructuring arbitration for neutrality and thus cannibalizing arbitration as an industry seems like a fine outcome to me. Feels a bit like the payday loan industry: I'm sure it does some people some good, but it's largely just predatory and throws people into a rigged game. We'd be better off with less of it.

learc83 8y ago
I'm fine with doing away with arbitration in most cases, but I'd rather just do that directly. My point is that it's hard to enforce neutrality, because there is always an implicit incentive for arbitrators to find in favor of big companies. Even if those companies aren't directly choosing a specific arbitrator, big companies in the aggregate are the ones primarily driving the business.
- deleted 8y ago
  [deleted]
verbify 8y ago
An underappreciated facet of payday loans is that without them desperate people would borrow from unsavoury people - making them illegal drives the high risk loan business underground into the hands of the Mafia. And then the consequences for the desperate people for defaulting is no longer bankruptcy, but broken legs or worse. I agree we should have less of it, but all legislation should be mindful of the consequences of certain types of restrictions.
- CaptainZapp 8y ago
  Why not cap the maximumum interest rates? Switzerland, not really a communist hell hole and quite liberal in economic matters, for example, caps annual interest rates at 15% annually. You don't see more broken legs than anywhere else.
  - verbify 8y ago
    If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere. Switzerland is a wealthy low-crime country to start with, the mafia do not have a strong hold. For example the homicide rate in Switzerland is 0.54 per 100,000 people, by comparison in the United States it is 5.35 per 100,000 people.
    - ardy42 8y ago
      >>> An underappreciated facet of payday loans is that without them desperate people would borrow from unsavoury people - making them illegal drives the high risk loan business underground into the hands of the Mafia. And then the consequences for the desperate people for defaulting is no longer bankruptcy, but broken legs or worse. > If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere. You could solve the loan shark problem and cap the interest rate by socializing the rest of the risk through some mechanism -- say a regulation that requires TBTF banks to offer payday loans and make up for the loss through their other products. Obviously there are details to be worked out, but the burden of a policy to combat loan sharking does not have to fall on the most vulnerable.
      - gruez 8y ago
        >say a regulation that requires TBTF banks to offer payday loans and make up for the loss through their other products but if banks are forced to make loans at a loss, aren't we effectively subsidizing people that don't repay loans? you might think this is a noble goal, but I'd doubt many people will be on board.
        ardy42 8y ago
        > but if banks are forced to make loans at a loss, aren't we effectively subsidizing people that don't repay loans? you might think this is a noble goal, but I'd doubt many people will be on board. Perhaps, but I have little sympathy for the feelings of the better-off people who want to clutch every penny to the point that they are jealous of the help the needy might get. If they're able to block reforms, then I think efforts need to be made to change their attitudes.
- glogla 8y ago
  "Payday loans - we're slightly better than mafia!" You might want to rethink that slogan.
  - verbify 8y ago
    On the contrary, I think you summed up my feelings pretty succinctly. Was there something I wrote that led you to think I felt otherwise?
    - natpalmer1776 8y ago
      I think the issue here is that in an ideal world, neither would exist. The original reply to your comment suggests that this is not even being considered and thus is satirizing your rationale.
      - verbify 8y ago
        I think that's a charitable reading of the parent comment. I thought I made it clear that in an ideal world payday loans (and the mafia) wouldn't exist, so I'm not even sure what kind of ideal world the parent comment is suggesting.
- pjc50 8y ago
  The demand is not really "pre-existing", it's one created by the payday loan industry to a large extent. Especially by advertising their use for buying consumer goods. What tends to happen is not that people go to the Mafia (traditionally they come to you!), but that people make creditors of their utility companies and landlords by deferring payment. (The older alternative to unsecured very high interest short term loans is those secured on valuables - the pawn shop).
  - verbify 8y ago
    I'm not sure about the laws in your locality (in the UK you have to have a licence from the UK Office of Fair Trading to offer consumer credit), but I would generally support banning anyone other than payday loan companies from selling very high interest loans - high interest loans from utility companies and landlords strikes me as an obscenity. > What tends to happen is not that people go to the Mafia (traditionally they come to you!) The mob definitely loans money at high-interest: http://archive.boston.com/news/world/europe/articles/2009/03/15/mafia_loan_sharks_making_a_killing/ http://archive.boston.com/news/world/europe/articles/2009/03... https://en.wikipedia.org/wiki/Loan_shark#Post-criminalization https://en.wikipedia.org/wiki/Loan_shark#Post-criminalizatio...
    - pjc50 8y ago
      (also in the UK) > high interest loans from utility companies and landlords strikes me as an obscenity. My point is usually that this is a lot cheaper, since these don't usually charge interest at the payday rates. Utility companies have barriers to cutting you off. But ultimately people who have negative cashflow week-to-week are going to get in trouble. Limiting how much debt they can get in causes them to hit the buffers earlier, but less hard. (Incidentally, this is yet another major problem with "universal credit": paying it on a 6 week delay is designed to force people to use payday lenders!)
  - vinceguidry 8y ago
    No, the demand is created by the people who are desperate. Let's not put the cart before the horse here. They're not going to go away even if the services do.
- daddylonglegs 8y ago
  I was told that the mafia in the US lost a lot of business with the rise of credit cards but I can't find a source for that. Some researchers say that people turn to payday loans not only because they don't have access to bank loans but because the charging structure for payday loans is transparent and up-front: "But most of the RiteCheck customers I interviewed had done the math and found that it was less expensive to use RiteCheck than to use a bank. In their experience, required minimum balances and fees for everything from ATM usage to account maintenance were going up." https://www.philadelphiafed.org/community-development/publications/cascade/84/04_why-do-the-unbanked-use-alternative-financial-services https://www.philadelphiafed.org/community-development/public... PS I'm not sure I'd call the payday lenders savoury myself, though they be less unsavoury than loan sharks.
- coryfklein 8y ago
  In the case of payday loans I don't think we have to worry about throwing the baby out with the bathwater. The number of people that will literally start turning to the Mafia for loans has got to be minuscule. On the other hand, the number of people who will no longer be bent over a barrel every day will be significantly improved.

learc83 8y ago

I'm fine with doing away with arbitration in most cases, but I'd rather just do that directly. My point is that it's hard to enforce neutrality, because there is always an implicit incentive for arbitrators to find in favor of big companies. Even if those companies aren't directly choosing a specific arbitrator, big companies in the aggregate are the ones primarily driving the business.

deleted 8y ago
[deleted]

verbify 8y ago

An underappreciated facet of payday loans is that without them desperate people would borrow from unsavoury people - making them illegal drives the high risk loan business underground into the hands of the Mafia. And then the consequences for the desperate people for defaulting is no longer bankruptcy, but broken legs or worse. I agree we should have less of it, but all legislation should be mindful of the consequences of certain types of restrictions.

CaptainZapp 8y ago
Why not cap the maximumum interest rates? Switzerland, not really a communist hell hole and quite liberal in economic matters, for example, caps annual interest rates at 15% annually. You don't see more broken legs than anywhere else.
- verbify 8y ago
  If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere. Switzerland is a wealthy low-crime country to start with, the mafia do not have a strong hold. For example the homicide rate in Switzerland is 0.54 per 100,000 people, by comparison in the United States it is 5.35 per 100,000 people.
  - ardy42 8y ago
    >>> An underappreciated facet of payday loans is that without them desperate people would borrow from unsavoury people - making them illegal drives the high risk loan business underground into the hands of the Mafia. And then the consequences for the desperate people for defaulting is no longer bankruptcy, but broken legs or worse. > If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere. You could solve the loan shark problem and cap the interest rate by socializing the rest of the risk through some mechanism -- say a regulation that requires TBTF banks to offer payday loans and make up for the loss through their other products. Obviously there are details to be worked out, but the burden of a policy to combat loan sharking does not have to fall on the most vulnerable.
    - gruez 8y ago
      >say a regulation that requires TBTF banks to offer payday loans and make up for the loss through their other products but if banks are forced to make loans at a loss, aren't we effectively subsidizing people that don't repay loans? you might think this is a noble goal, but I'd doubt many people will be on board.
      - ardy42 8y ago
        > but if banks are forced to make loans at a loss, aren't we effectively subsidizing people that don't repay loans? you might think this is a noble goal, but I'd doubt many people will be on board. Perhaps, but I have little sympathy for the feelings of the better-off people who want to clutch every penny to the point that they are jealous of the help the needy might get. If they're able to block reforms, then I think efforts need to be made to change their attitudes.
glogla 8y ago
"Payday loans - we're slightly better than mafia!" You might want to rethink that slogan.
- verbify 8y ago
  On the contrary, I think you summed up my feelings pretty succinctly. Was there something I wrote that led you to think I felt otherwise?
  - natpalmer1776 8y ago
    I think the issue here is that in an ideal world, neither would exist. The original reply to your comment suggests that this is not even being considered and thus is satirizing your rationale.
    - verbify 8y ago
      I think that's a charitable reading of the parent comment. I thought I made it clear that in an ideal world payday loans (and the mafia) wouldn't exist, so I'm not even sure what kind of ideal world the parent comment is suggesting.
pjc50 8y ago
The demand is not really "pre-existing", it's one created by the payday loan industry to a large extent. Especially by advertising their use for buying consumer goods. What tends to happen is not that people go to the Mafia (traditionally they come to you!), but that people make creditors of their utility companies and landlords by deferring payment. (The older alternative to unsecured very high interest short term loans is those secured on valuables - the pawn shop).
- verbify 8y ago
  I'm not sure about the laws in your locality (in the UK you have to have a licence from the UK Office of Fair Trading to offer consumer credit), but I would generally support banning anyone other than payday loan companies from selling very high interest loans - high interest loans from utility companies and landlords strikes me as an obscenity. > What tends to happen is not that people go to the Mafia (traditionally they come to you!) The mob definitely loans money at high-interest: http://archive.boston.com/news/world/europe/articles/2009/03/15/mafia_loan_sharks_making_a_killing/ http://archive.boston.com/news/world/europe/articles/2009/03... https://en.wikipedia.org/wiki/Loan_shark#Post-criminalization https://en.wikipedia.org/wiki/Loan_shark#Post-criminalizatio...
  - pjc50 8y ago
    (also in the UK) > high interest loans from utility companies and landlords strikes me as an obscenity. My point is usually that this is a lot cheaper, since these don't usually charge interest at the payday rates. Utility companies have barriers to cutting you off. But ultimately people who have negative cashflow week-to-week are going to get in trouble. Limiting how much debt they can get in causes them to hit the buffers earlier, but less hard. (Incidentally, this is yet another major problem with "universal credit": paying it on a 6 week delay is designed to force people to use payday lenders!)
- vinceguidry 8y ago
  No, the demand is created by the people who are desperate. Let's not put the cart before the horse here. They're not going to go away even if the services do.
daddylonglegs 8y ago
I was told that the mafia in the US lost a lot of business with the rise of credit cards but I can't find a source for that. Some researchers say that people turn to payday loans not only because they don't have access to bank loans but because the charging structure for payday loans is transparent and up-front: "But most of the RiteCheck customers I interviewed had done the math and found that it was less expensive to use RiteCheck than to use a bank. In their experience, required minimum balances and fees for everything from ATM usage to account maintenance were going up." https://www.philadelphiafed.org/community-development/publications/cascade/84/04_why-do-the-unbanked-use-alternative-financial-services https://www.philadelphiafed.org/community-development/public... PS I'm not sure I'd call the payday lenders savoury myself, though they be less unsavoury than loan sharks.
coryfklein 8y ago
In the case of payday loans I don't think we have to worry about throwing the baby out with the bathwater. The number of people that will literally start turning to the Mafia for loans has got to be minuscule. On the other hand, the number of people who will no longer be bent over a barrel every day will be significantly improved.