By Mouser the King Cat
One refrain around the 'hood that has resonated for decades
is that The Man is sticking it to everybody and getting rich. So why not just
ignore him? Well, that’s not easy, because in many states he offers payday
loans. From The New York Times:
borrow money against their paychecks are generally supposed to pay it back
within two weeks, with substantial fees piled on: A customer who borrows $500
would typically owe around $575, at an annual percentage rate of 391%. But most
borrowers routinely roll the loan over into a new one, becoming less likely to
ever emerge from the debt.
banks are generally barred from this kind of lending. More than a dozen states
have set their own rate caps and other rules that essentially prohibit payday
loans, but the market is flourishing in at least 30 states. Some 16,000 lenders
run online and storefront operations that thrive on the hefty profits.
Consumer Financial Protection Bureau is ready to crack down, and payday lenders
are scared. But so are advocates for people who borrow. Again from The Times:
Georgia made most short-term, high-interest loans illegal. Afterward, Georgia
residents paid more bounced-check overdraft fees and became more likely to file
for bankruptcy, according to a report by the Federal Reserve Bank of New York.
… When short-term loans disappear, the need that drives them does not; many
customers simply shift to other expensive forms of credit like pawn shops, or
pay late fees on overdue bills, the study’s authors concluded.
these stories mention what would bring The Man down: People living within their
means. So he continues to thrive, laughing at the peons struggling to pay him
development, Capital One Financial Corp. sees “opportunities for growth” in the
subprime loan market. From the Washington Business Journal:
originations grew to $6.5 billion, up 20% from $5.4 billion during the same
time last year, and up 12% over the previous quarter. … Its total auto loan
portfolio jumped to $44.5 billion in the second quarter, an 11% increase from
the same time last year. The company does not provide specifics on how much of
the portfolio is subprime.
lending biz, “subprime” too often means “I’ll pay you back for a while but
don’t feel exceptionally obligated because, after all, you are The Man and
you’ve been sticking it to me all my life.” In other words, you may be hooked
on the fast cash, but The Man is hooked on the juice he gets from lending it.
None of this will end well.