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

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.