In Defense of Payday Lending Video
Few industries are more reviled than payday lending, which primarily services the working poor by offering short-term loans at high interest rates. Payday customers borrow an average of $350 for a period of two weeks, or until their next paycheck comes in. The money is handed over on the spot, once the payday store can verify that the customer has a job, earns enough to afford the loan, and hasn't recently defaulted with another vendor. Payday loans are in high demand: There are 22,000 payday storefronts in the United States and in 2009 they loaned a combined $35 billion.
And yet the industry is fighting for its survival. Montana just voted to make it illegal for the payday-loan industry to operate profitably, so lenders are loading their wagons and wheeling out of "The Land of the Shining Mountains." They've already moved on from Oregon, New Hampshire, North Carolina, Arizona, Georgia, and Washington, D.C, because of similar regulations. The annualized interest on payday loans runs about 400 percent, but the reality is that payday firms see returns closer to 10 percent, or about the same as other less-demonized financial service providers.
Now there's a danger the federal government will quash the rest of the U.S. payday industry. The Frank-Dodd Financial Reform bill, passed in July, created the Consumer Financial Protection Bureau (CFPB), which posseses the power to regulate paydays at the national level for the first time. The vaguely written law doesn't allow the CFPB to cap interest rates, but regulators have the latitude to enact other rules that would obliterate profits, such as limiting the number of payday loans a customer can take out over a set period of time.
Payday critics, such as the Center for Financial Responsible Lending (which declined our interview request) argue that payday stores "trap" their customers and practice what "amounts to legal loan sharking."
Reason.tv's Nick Gillespie looks at payday loans?why people depend on them, why they're expensive, and the assumption at the core of every attack on the industry: that the working-poor are too stupid to manage their own money.
The story features payday antagonist Gary Rivlin, the author of the recent book Broke USA; George Mason law professor Todd Zywicki, who has studied paydays; and Greg Fay and Saran Goubeaux of Hometown Cash Finance, a small chain of payday stores in Ohio.
Two studies are citied in this story: the Federal Reserve's 2007 look at the effect of booting paydays out of George and Virginia, and the 2007 Vanderbilt-Oxford University study that reveals that, contrary to the claims of industry critics, paydays aren't exceptionally profitable.
For more info, read Katherine Mangu-Ward's October 2009 feature story on payday lending in Reason Magazine, and her Wall Street Journal review of Rivlin's Broke USA.
For complete links on this story go to:
http://reason.tv/video/show/payday-loans
Approximately 5 minutes.
Produced by Jim Epstein, with help from Dan Hayes, Josh Swain, and Michael Moynihan.
Go to http://www.reason.tv for HD, iPod, and audio versions of this and all our videos, and subscribe to Reason.tv's YouTube channel to receive automatic notification when new content is posted.
Going into Advance ...
Going into Advance America now to get $400.00 it is well worth? the $45 service fee for what having this money NOW will do for me and my family... I am a single income family with a disabled wife and two small children... Sometimes your income and your needs do not line up on the calander
This is? a ...
This is? a brilliant piece.
Excellent? comment.
Excellent? comment.
The best defense ...
The best defense they can give is that its not much more evil than regular banking.. thats like saying that a murderer is not much worse than a child molester.. do? we really have to choose which sick institution feeds off the poor and uninformed?
I like PAYDAY? ...
I like PAYDAY? LOANS TURBO.com it is fast and trustful!
Simple? put, make ...
Simple? put, make sure you look into any business you decide to give money too. Use common sense.
the only? site ill ...
the only? site ill ever trust is fastcashvegas. com. It's the best i promise.
Great spin? on a ...
Great spin? on a disgusting product!
I am being? serious ...
I am being? serious! Excellent content and quality video...
go to ...
go to saynotopaydayloans.co.uk - say no more!?
credit card? ...
credit card? companies aren't any better! I read that cashloan.me gives you payday loans and cash same day. Got a quote through them and then went to others I found online through google cash loan and decided to get the cash
We have bad credit ...
We have bad credit and got a loan with fastcashvegas com without any problems, but they actually link to installment loans which for? us was better than most payday loans
If you have bad ...
If you have bad credit and you need a payday loan to get a cash advance payday today have come to the right place. Simply? complete the online form and soon receive payday loans instant approval directly connected to your personal bank, regardless of your credit. lightpaydayloan(dot)com
so the difference ...
so the difference between me having a credit card with $6000 limit with 10% interest and some 1 borrowing $300 with 200% interest is that? the call me middle class bonkers ppl its all about access.
I know that we ...
I know that we borrowed $300 from fastcashvegas? com and it wasn't bad at all...
They are completely ...
They are completely right here, all? that is going to happen is people will go to a mafia loans and get their legs broken instead of just a phone call. When you need $300 there are few options. More people who will have more problems, THANKS, OBAMA!
You write them a ...
You write them a postdated check, and? when the time comes, they cash it. Or you can buy it back. If they try and cash it and there are insufficient funds, you can be held on criminal charges, and never be able to get a bank account until it is all paid back.
They don't realize ...
They don't realize they legally bribe the regulators thru campain contributions so the people get the short end of the stick. Bank? odf America is a perfect example. One of Obama's biggist contributors to his election. They got a huge bailout from the theft from the people, and paid their executives huge bonuses, and then invested the rest in China. Then they raised everyones credit card rates. Yeah, Obama is helping the country? ANd Giving the Unions control of all of healthcare?
No, the people ...
No, the people define the boundries and expect the govt to enforce it, unlike what Obama has done. The govt is supposed to do? the peoples bidding, the people define it, the govt doesn't define it. we are a Republic, with laws the people ask for. Not what the people in govt might want. They work for us. Remember?
All I meant is that ...
All I meant is that government defines the boundaries of our property rights. For example, suppose you want to mow your lawn? a six in the morning and it interrupts my sleep. Unless we can reach an accommodation between the two of us we would refer the matter to local noise bylaws. The law defines where my property rights end and yours begin and that is a legitimate function of government.
"The definition? ...
"The definition? and enforcement of property rights is a function of government; "
How is the definition of "rights" given by the government?
Have you read our declaration of independance?
maybe you should.
And with the people ...
And with the people getting dumber every day,? there is little chance of improvement.
I know many who get payday loans to go to the casinos in hopes to have winnings pay it back. Dumb.
Absolutely. All you ...
Absolutely. All you have to do is be smart about? it.
Good luck getting a ...
Good luck getting a transmission repaired for? $400 butthole
U BORROWED 300, U ...
U BORROWED 300, U HAVE TO PAY A 45 FEE, HOW CAN U BE MAD??.. DID U WANT TO BORROW 300 & PAY BACK? 150??.. WOULDNT THE COMPANY GO BUST IN DAYS,, GTFOH
The expansion of ...
The expansion of payday lending is indicative of larger? economic problems. There would be no demand for them if people weren't struggling.
The elites, rather than address the underlying problems, would like to ban the symptom. This is the logical equivalent of pushing down the mercury in the thermometer to change the temperature.
I mean you are just ...
I mean you are just wrong. Everyone who thinks thinks you are wrong. I do not know how to convince you here. You need a couple of good courses in philosophy and logic. But it is good that you are at least asking? the question. That is more than most people do. Good luck
My point has been ...
My point has been consistent, that restricting someones options (like prohibiting organ sale) cannot be beneficial.
Since my "desert" analogy did not make sense to you I elected, rather than defend it's validity, to express my point in a different way. I apologize for any confusion this may have caused.?
