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How exactly does that work? Person A had an unexpected expense and needs a little help, so we just take it out of the pocket of Person B, who happens to be the

How exactly does that work? Person A had an unexpected expense and needs a little help, so we just take it out of the pocket of Person B, who happens to be the nearest wealthy person?

dlp211 8y ago
If that was what payday loans were actually used for then their existence would be a little bit easier to justify. That isn't what payday loans are used for. They are usury of the worst kind taking advantaged of the worst off in our society. I'm not going to sit here and pretend I have a definitive solution, but perhaps bringing actual banking to these neighborhoods would be a good start.
- larrywright 8y ago
  It's not about having bank branches nearby, it's about people that can't get traditional loans or credit cards. These are loans of last resort for people that don't have enough (or good enough) credit. The default rate on these is around 20%. I don't have a solution either, but this is a more nuanced issue than just not having a bank nearby.
  - dlp211 8y ago
    You are making the assumption that all banks have to work the same. Even at a default rate of 20%, that doesn't justify the 300% APRs that payday lenders charge. And I agree that banking is not a sufficient solution, but it is absolutely a necessary condition for solving this crisis.
  - minikites 8y ago
    >The default rate on these is around 20%. Then we need higher taxes to fund loan insurance and legally enforced interest rates for loans. Wealth and poverty in the USA is an allocation problem: every billionaire represents a public policy failure. If you're concerned about either "people might take advantage of the system" or "what if they spend the money on stupid things", my preemptive answer is: the people who become billionaires do so by taking advantage of the system and if we can't trust people to spend money rationally, what does that imply about capitalism as a whole?

How exactly does that work? Person A had an unexpected expense and needs a little help, so we just take it out of the pocket of Person B, who happens to be the nearest wealthy person?

dlp211 8y ago

If that was what payday loans were actually used for then their existence would be a little bit easier to justify. That isn't what payday loans are used for. They are usury of the worst kind taking advantaged of the worst off in our society. I'm not going to sit here and pretend I have a definitive solution, but perhaps bringing actual banking to these neighborhoods would be a good start.

larrywright 8y ago
It's not about having bank branches nearby, it's about people that can't get traditional loans or credit cards. These are loans of last resort for people that don't have enough (or good enough) credit. The default rate on these is around 20%. I don't have a solution either, but this is a more nuanced issue than just not having a bank nearby.
- dlp211 8y ago
  You are making the assumption that all banks have to work the same. Even at a default rate of 20%, that doesn't justify the 300% APRs that payday lenders charge. And I agree that banking is not a sufficient solution, but it is absolutely a necessary condition for solving this crisis.
- minikites 8y ago
  >The default rate on these is around 20%. Then we need higher taxes to fund loan insurance and legally enforced interest rates for loans. Wealth and poverty in the USA is an allocation problem: every billionaire represents a public policy failure. If you're concerned about either "people might take advantage of the system" or "what if they spend the money on stupid things", my preemptive answer is: the people who become billionaires do so by taking advantage of the system and if we can't trust people to spend money rationally, what does that imply about capitalism as a whole?