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On June 08 2019 12:18 GreenHorizons wrote: Expand Worker Ownership, Wall Street Speculation Tax, End Predatory Lending, Public Education Bernie's got ideas out for all of them and they aren't entirely terrible. Yang's one of the few candidates that also has ideas, but much worse ones.
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it. Things like payday loans have high interest rates because they are inherently risky loans. High interests rates are necessary to compensate for the large number of such loans that turn into bad debt. If you don't let lenders charge those market rates for those types of loans, they simply won't offer those loans any more. How does that help the poor person who needs immediate access to money for something? This "ending predatory lending" policy is a perfect example of how the road to hell is paved over with good, socialist intentions.
You're arguing against a 'dumb policy' that doesn't exist, which is your specialty.
What you are arguing against: end predatory small loans by making high risk small loans unavailable
What people are trying to do: end predatory small loans by making high risk small loans available through non-predatory means, in Sanders' case through the postal service
The main reasons being (1) the phantasmagoric interest rates do not match the risk as you will see below and (2) the companies doing this do nothing else and have a very limited number of customers each.
The average payday loan customer borrows $375 over five months of the year and pays $520 in fees, while banks and credit unions could profitably offer that same $375 over five months for less than $100
This is because:
Payday lenders’ products are so expensive because they operate retail storefronts that serve an average of only 500 unique borrowers a year and cover their overhead selling few financial products to a small number of customers. Two-thirds of revenue goes to handle operating expenses, such as paying employees and rent, while one-sixth of revenue covers losses.
and
Yet while 81 percent of payday loan customers would prefer to borrow from their bank or credit union if small- dollar installment loans were available to them there, banks and credit unions do not offer such loans at scale today primarily because regulators have not issued guidance or granted specific regulatory approvals for how banks and credit unions should offer the loans.
You realize that that article proves my point even harder, right? First, it points out that the reason for the high interest rates is a function of the cost of operations and the credit risk of the lenders (albeit I presumed that the risk of the lenders was the bigger cost). But here's the really amusing thing: the article makes it clear that government intervention in the lending space is the real cause of the high interest rates. Banks and other institutions with lower capital and overhead costs who would be able to lend the money more cheaply can't do so because of federal regulations. Hence payday lenders filled the market void because there is a market demand for these loans (ie people need them). Put simply, the government is screwing over poor people by forcing them to use unregulated financial services that have higher capital costs.
And Sanders' solution to this is pure idiocy. Yes, let's fix a problem caused by government regulation by simply nationalizing the payday loan industry and running it through the post office, thereby having the taxpayer subsidize it. Everyone knows that the best solution to government problems is more government!
I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
On June 08 2019 12:18 GreenHorizons wrote: Expand Worker Ownership, Wall Street Speculation Tax, End Predatory Lending, Public Education Bernie's got ideas out for all of them and they aren't entirely terrible. Yang's one of the few candidates that also has ideas, but much worse ones.
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it. Things like payday loans have high interest rates because they are inherently risky loans. High interests rates are necessary to compensate for the large number of such loans that turn into bad debt. If you don't let lenders charge those market rates for those types of loans, they simply won't offer those loans any more. How does that help the poor person who needs immediate access to money for something? This "ending predatory lending" policy is a perfect example of how the road to hell is paved over with good, socialist intentions.
You're arguing against a 'dumb policy' that doesn't exist, which is your specialty.
What you are arguing against: end predatory small loans by making high risk small loans unavailable
What people are trying to do: end predatory small loans by making high risk small loans available through non-predatory means, in Sanders' case through the postal service
The main reasons being (1) the phantasmagoric interest rates do not match the risk as you will see below and (2) the companies doing this do nothing else and have a very limited number of customers each.
The average payday loan customer borrows $375 over five months of the year and pays $520 in fees, while banks and credit unions could profitably offer that same $375 over five months for less than $100
This is because:
Payday lenders’ products are so expensive because they operate retail storefronts that serve an average of only 500 unique borrowers a year and cover their overhead selling few financial products to a small number of customers. Two-thirds of revenue goes to handle operating expenses, such as paying employees and rent, while one-sixth of revenue covers losses.
and
Yet while 81 percent of payday loan customers would prefer to borrow from their bank or credit union if small- dollar installment loans were available to them there, banks and credit unions do not offer such loans at scale today primarily because regulators have not issued guidance or granted specific regulatory approvals for how banks and credit unions should offer the loans.
You realize that that article proves my point even harder, right? First, it points out that the reason for the high interest rates is a function of the cost of operations and the credit risk of the lenders (albeit I presumed that the risk of the lenders was the bigger cost). But here's the really amusing thing: the article makes it clear that government intervention in the lending space is the real cause of the high interest rates. Banks and other institutions with lower capital and overhead costs who would be able to lend the money more cheaply can't do so because of federal regulations. Hence payday lenders filled the market void because there is a market demand for these loans (ie people need them). Put simply, the government is screwing over poor people by forcing them to use unregulated financial services that have higher capital costs.
And Sanders' solution to this is pure idiocy. Yes, let's fix a problem caused by government regulation by simply nationalizing the payday loan industry and running it through the post office, thereby having the taxpayer subsidize it. Everyone knows that the best solution to government problems is more government!
I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
On June 08 2019 12:18 GreenHorizons wrote: Expand Worker Ownership, Wall Street Speculation Tax, End Predatory Lending, Public Education Bernie's got ideas out for all of them and they aren't entirely terrible. Yang's one of the few candidates that also has ideas, but much worse ones.
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it. Things like payday loans have high interest rates because they are inherently risky loans. High interests rates are necessary to compensate for the large number of such loans that turn into bad debt. If you don't let lenders charge those market rates for those types of loans, they simply won't offer those loans any more. How does that help the poor person who needs immediate access to money for something? This "ending predatory lending" policy is a perfect example of how the road to hell is paved over with good, socialist intentions.
You're arguing against a 'dumb policy' that doesn't exist, which is your specialty.
What you are arguing against: end predatory small loans by making high risk small loans unavailable
What people are trying to do: end predatory small loans by making high risk small loans available through non-predatory means, in Sanders' case through the postal service
The main reasons being (1) the phantasmagoric interest rates do not match the risk as you will see below and (2) the companies doing this do nothing else and have a very limited number of customers each.
The average payday loan customer borrows $375 over five months of the year and pays $520 in fees, while banks and credit unions could profitably offer that same $375 over five months for less than $100
This is because:
Payday lenders’ products are so expensive because they operate retail storefronts that serve an average of only 500 unique borrowers a year and cover their overhead selling few financial products to a small number of customers. Two-thirds of revenue goes to handle operating expenses, such as paying employees and rent, while one-sixth of revenue covers losses.
and
Yet while 81 percent of payday loan customers would prefer to borrow from their bank or credit union if small- dollar installment loans were available to them there, banks and credit unions do not offer such loans at scale today primarily because regulators have not issued guidance or granted specific regulatory approvals for how banks and credit unions should offer the loans.
You realize that that article proves my point even harder, right? First, it points out that the reason for the high interest rates is a function of the cost of operations and the credit risk of the lenders (albeit I presumed that the risk of the lenders was the bigger cost). But here's the really amusing thing: the article makes it clear that government intervention in the lending space is the real cause of the high interest rates. Banks and other institutions with lower capital and overhead costs who would be able to lend the money more cheaply can't do so because of federal regulations. Hence payday lenders filled the market void because there is a market demand for these loans (ie people need them). Put simply, the government is screwing over poor people by forcing them to use unregulated financial services that have higher capital costs.
And Sanders' solution to this is pure idiocy. Yes, let's fix a problem caused by government regulation by simply nationalizing the payday loan industry and running it through the post office, thereby having the taxpayer subsidize it. Everyone knows that the best solution to government problems is more government!
I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
I think your argument is ridiculous on it's face and that your concern for poor people is insincere but this just made me laugh.
What do you think the profit margins are for a company like Visa?
On June 10 2019 07:08 xDaunt wrote: [quote] You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it. Things like payday loans have high interest rates because they are inherently risky loans. High interests rates are necessary to compensate for the large number of such loans that turn into bad debt. If you don't let lenders charge those market rates for those types of loans, they simply won't offer those loans any more. How does that help the poor person who needs immediate access to money for something? This "ending predatory lending" policy is a perfect example of how the road to hell is paved over with good, socialist intentions.
You're arguing against a 'dumb policy' that doesn't exist, which is your specialty.
What you are arguing against: end predatory small loans by making high risk small loans unavailable
What people are trying to do: end predatory small loans by making high risk small loans available through non-predatory means, in Sanders' case through the postal service
The main reasons being (1) the phantasmagoric interest rates do not match the risk as you will see below and (2) the companies doing this do nothing else and have a very limited number of customers each.
The average payday loan customer borrows $375 over five months of the year and pays $520 in fees, while banks and credit unions could profitably offer that same $375 over five months for less than $100
This is because:
Payday lenders’ products are so expensive because they operate retail storefronts that serve an average of only 500 unique borrowers a year and cover their overhead selling few financial products to a small number of customers. Two-thirds of revenue goes to handle operating expenses, such as paying employees and rent, while one-sixth of revenue covers losses.
and
Yet while 81 percent of payday loan customers would prefer to borrow from their bank or credit union if small- dollar installment loans were available to them there, banks and credit unions do not offer such loans at scale today primarily because regulators have not issued guidance or granted specific regulatory approvals for how banks and credit unions should offer the loans.
You realize that that article proves my point even harder, right? First, it points out that the reason for the high interest rates is a function of the cost of operations and the credit risk of the lenders (albeit I presumed that the risk of the lenders was the bigger cost). But here's the really amusing thing: the article makes it clear that government intervention in the lending space is the real cause of the high interest rates. Banks and other institutions with lower capital and overhead costs who would be able to lend the money more cheaply can't do so because of federal regulations. Hence payday lenders filled the market void because there is a market demand for these loans (ie people need them). Put simply, the government is screwing over poor people by forcing them to use unregulated financial services that have higher capital costs.
And Sanders' solution to this is pure idiocy. Yes, let's fix a problem caused by government regulation by simply nationalizing the payday loan industry and running it through the post office, thereby having the taxpayer subsidize it. Everyone knows that the best solution to government problems is more government!
I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
I think your argument is ridiculous on it's face and that your concern for poor people is insincere but this just made me laugh.
What do you think the profit margins are for a company like Visa?
I'll just tell you now that this is the wrong question to ask for a lot of reasons. First and foremost, Visa doesn't make money directly off of debt service.
On June 10 2019 09:22 Dan HH wrote: [quote] You're arguing against a 'dumb policy' that doesn't exist, which is your specialty.
What you are arguing against: end predatory small loans by making high risk small loans unavailable
What people are trying to do: end predatory small loans by making high risk small loans available through non-predatory means, in Sanders' case through the postal service
The main reasons being (1) the phantasmagoric interest rates do not match the risk as you will see below and (2) the companies doing this do nothing else and have a very limited number of customers each.
You realize that that article proves my point even harder, right? First, it points out that the reason for the high interest rates is a function of the cost of operations and the credit risk of the lenders (albeit I presumed that the risk of the lenders was the bigger cost). But here's the really amusing thing: the article makes it clear that government intervention in the lending space is the real cause of the high interest rates. Banks and other institutions with lower capital and overhead costs who would be able to lend the money more cheaply can't do so because of federal regulations. Hence payday lenders filled the market void because there is a market demand for these loans (ie people need them). Put simply, the government is screwing over poor people by forcing them to use unregulated financial services that have higher capital costs.
And Sanders' solution to this is pure idiocy. Yes, let's fix a problem caused by government regulation by simply nationalizing the payday loan industry and running it through the post office, thereby having the taxpayer subsidize it. Everyone knows that the best solution to government problems is more government!
I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
I think your argument is ridiculous on it's face and that your concern for poor people is insincere but this just made me laugh.
What do you think the profit margins are for a company like Visa?
I'll just tell you now that this is the wrong question to ask for a lot of reasons. First and foremost, Visa doesn't make money directly off of debt service.
It's not wrong, it just makes the argument that they can't afford to provide better rates obviously bogus, which is inconvenient for you.
On June 10 2019 10:00 xDaunt wrote: [quote] You realize that that article proves my point even harder, right? First, it points out that the reason for the high interest rates is a function of the cost of operations and the credit risk of the lenders (albeit I presumed that the risk of the lenders was the bigger cost). But here's the really amusing thing: the article makes it clear that government intervention in the lending space is the real cause of the high interest rates. Banks and other institutions with lower capital and overhead costs who would be able to lend the money more cheaply can't do so because of federal regulations. Hence payday lenders filled the market void because there is a market demand for these loans (ie people need them). Put simply, the government is screwing over poor people by forcing them to use unregulated financial services that have higher capital costs.
And Sanders' solution to this is pure idiocy. Yes, let's fix a problem caused by government regulation by simply nationalizing the payday loan industry and running it through the post office, thereby having the taxpayer subsidize it. Everyone knows that the best solution to government problems is more government!
I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
I think your argument is ridiculous on it's face and that your concern for poor people is insincere but this just made me laugh.
What do you think the profit margins are for a company like Visa?
I'll just tell you now that this is the wrong question to ask for a lot of reasons. First and foremost, Visa doesn't make money directly off of debt service.
It's not wrong, it just makes the argument that they can't afford to provide better rates obviously bogus which is inconvenient for you.
It is wrong, and it tells me that you don’t understand enough about how the industry actually works to recommend policy for it.
On June 10 2019 11:31 Dan HH wrote: [quote] I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
I think your argument is ridiculous on it's face and that your concern for poor people is insincere but this just made me laugh.
What do you think the profit margins are for a company like Visa?
I'll just tell you now that this is the wrong question to ask for a lot of reasons. First and foremost, Visa doesn't make money directly off of debt service.
It's not wrong, it just makes the argument that they can't afford to provide better rates obviously bogus which is inconvenient for you.
It is wrong, and it tells me that you don’t understand enough about how the industry actually works to recommend policy for it.
You're saying that while keeping half of every dollar they make in revenue as profit, lending money through digital transactions, they can't possibly offer higher risk people better rates. It's completely bogus on it's face and hiding behind some vague specialized knowledge doesn't help.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
[quote]
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
I think your argument is ridiculous on it's face and that your concern for poor people is insincere but this just made me laugh.
What do you think the profit margins are for a company like Visa?
I'll just tell you now that this is the wrong question to ask for a lot of reasons. First and foremost, Visa doesn't make money directly off of debt service.
It's not wrong, it just makes the argument that they can't afford to provide better rates obviously bogus which is inconvenient for you.
It is wrong, and it tells me that you don’t understand enough about how the industry actually works to recommend policy for it.
You're saying that while keeping half of every dollar they make in revenue as profit, lending money through digital transactions, they can't possibly offer higher risk people better rates. It's completely bogus on it's face and hiding behind some vague specialized knowledge doesn't help.
1) Visa has nothing to do with the debt and, thus, the rates. Visa makes its money from transactions and consumer data. If you don’t understand and accept this, then we aren’t going to be going anywhere,
2) The financial institutions that hold the debt need the higher rates to make the operation worthwhile. In this regard, the issue isn’t just one of profit. It’s a question of opportunity cost. The institution will lend its money elsewhere if the rates are artificially capped.
As I originally said, you are asking the wrong question.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
I think your argument is ridiculous on it's face and that your concern for poor people is insincere but this just made me laugh.
What do you think the profit margins are for a company like Visa?
I'll just tell you now that this is the wrong question to ask for a lot of reasons. First and foremost, Visa doesn't make money directly off of debt service.
It's not wrong, it just makes the argument that they can't afford to provide better rates obviously bogus which is inconvenient for you.
It is wrong, and it tells me that you don’t understand enough about how the industry actually works to recommend policy for it.
You're saying that while keeping half of every dollar they make in revenue as profit, lending money through digital transactions, they can't possibly offer higher risk people better rates. It's completely bogus on it's face and hiding behind some vague specialized knowledge doesn't help.
1) Visa has nothing to do with the debt and, thus, the rates. Visa makes its money from transactions and consumer data. If you don’t understand and accept this, then we aren’t going to be going anywhere,
2) The financial institutions that hold the debt need the higher rates to make the operation worthwhile. In this regard, the issue isn’t just one of profit. It’s a question of opportunity cost. The institution will lend its money elsewhere if the rates are artificially capped.
As I originally said, you are asking the wrong question.
1) Sure they do, they've just effectively pushed virtually all of the risk onto other institutions for a great profit. By essentially operating as a definitively overpriced debt scribe/debtor referral service they are the middleman between people seeking temporary/short term monetary loans and the institutions they send the debt to.
2) I mean this is one reason why capitalism is trash imo, it lets people starve in the street so a few get to see a bigger number in their bank account and call it righteous. Seeking profit is inherently exploitative. It's extracting wealth from others work to concentrate it in the hands of people who didn't do the work.
The more profit the better in capitalism, but more profit necessitates more exploitation and there is absolutely no way around that under capitalism.
Legislation is merely meant to try to restrict it's ability to do what it does, it can't make capitalism not exploitative, because then it's no longer capitalism (because there is little or no profit for example).
This guy is so terrible. Why is it bad to robot away repetitive, boring, minimum wage jobs (the examples he lists as call centers, checkouts, pizza delivery, and retail)? People SHOULD be moving up into service jobs, I'm all for those jobs disappearing. The people who are going to lose jobs are people who are in high school and need a part time after school job to buy marijuana. Andrew Yang is a waste of airtime.
Yea...no. This is terribly inaccurate depiction of the average retail worker.
On June 10 2019 07:08 xDaunt wrote: [quote] You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it. Things like payday loans have high interest rates because they are inherently risky loans. High interests rates are necessary to compensate for the large number of such loans that turn into bad debt. If you don't let lenders charge those market rates for those types of loans, they simply won't offer those loans any more. How does that help the poor person who needs immediate access to money for something? This "ending predatory lending" policy is a perfect example of how the road to hell is paved over with good, socialist intentions.
You're arguing against a 'dumb policy' that doesn't exist, which is your specialty.
What you are arguing against: end predatory small loans by making high risk small loans unavailable
What people are trying to do: end predatory small loans by making high risk small loans available through non-predatory means, in Sanders' case through the postal service
The main reasons being (1) the phantasmagoric interest rates do not match the risk as you will see below and (2) the companies doing this do nothing else and have a very limited number of customers each.
The average payday loan customer borrows $375 over five months of the year and pays $520 in fees, while banks and credit unions could profitably offer that same $375 over five months for less than $100
This is because:
Payday lenders’ products are so expensive because they operate retail storefronts that serve an average of only 500 unique borrowers a year and cover their overhead selling few financial products to a small number of customers. Two-thirds of revenue goes to handle operating expenses, such as paying employees and rent, while one-sixth of revenue covers losses.
and
Yet while 81 percent of payday loan customers would prefer to borrow from their bank or credit union if small- dollar installment loans were available to them there, banks and credit unions do not offer such loans at scale today primarily because regulators have not issued guidance or granted specific regulatory approvals for how banks and credit unions should offer the loans.
You realize that that article proves my point even harder, right? First, it points out that the reason for the high interest rates is a function of the cost of operations and the credit risk of the lenders (albeit I presumed that the risk of the lenders was the bigger cost). But here's the really amusing thing: the article makes it clear that government intervention in the lending space is the real cause of the high interest rates. Banks and other institutions with lower capital and overhead costs who would be able to lend the money more cheaply can't do so because of federal regulations. Hence payday lenders filled the market void because there is a market demand for these loans (ie people need them). Put simply, the government is screwing over poor people by forcing them to use unregulated financial services that have higher capital costs.
And Sanders' solution to this is pure idiocy. Yes, let's fix a problem caused by government regulation by simply nationalizing the payday loan industry and running it through the post office, thereby having the taxpayer subsidize it. Everyone knows that the best solution to government problems is more government!
I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
You defeat your own point because later you point out how visa actually makes there money, which is numbers of transactions. So they can afford to way over advance people since they make so much on the transaction. And because there is no paycheck they have taken as collateral, or car title or whatever their debt is arguably riskier. Not to mention all the expense of their loyalty programs. I don't know enough about the numbers to say that for sure they can't turn a profit/break even at 15% when they have no need to make a profit and already have all the infrastructure and physical locations. But you can't say that they can't, the difference is I know enough about the industry to know I don't know enough to make the kind of bold proclamations you are comfortable with.
No, I did not defeat my own point.
Let me explain how Visa makes money because none of you understands it. Visa is a financial services company that runs a network for processing electronic transactions. Visa licenses this network to financial institutions who issue credit cards that use the Visa network. Visa does not issue the credit cards. Visa makes money from the merchant fees associated with each transaction on the cards. In other words, if you buy something with your credit card at a store, the store pays the merchant fee which is typically somewhere between 1.5% and 4% of the price depending upon the card and the type of transaction (in practice, this merchant fee gets divided up between Visa and the financial institution, and sometimes to the consumer, but we'll skip that for now). Visa has no interest in the debt that you now owe on the transaction. Instead, the financial institution that issues the card holds the debt. They're the ones who are ultimately responsible for setting the interest rates --- not Visa. So when GH starts spouting off about how Visa has high enough profit margins to support providing consumers with credit cards that carry lower interest rates, he's making an argument that is grounded in complete ignorance of how Visa and its credits cards actually work. This is why I said that he was asking the wrong question.
So if we turn to the question of the profitability of card issuers (ie the financial companies that hold the debt), it should be pretty obvious that capping interest at 15% is unsustainable for higher risk debt. A 15% return implies a low profit margin even presuming that all debts are paid (which is ludicrous). I don't know what the operational costs are, but the profit margin is necessarily going to be well-below 15% because it costs money to run the business. Throw in the incidence of bad debt, and we're likely in an unprofitable situation, and certainly one where the financial institution can find better returns on investment. And again, this should be obvious because none of the many, many issuers of credit cards offer 15% rates to high risk borrowers. If they could make money on it, you best that they would. Even Amazon, the king of slim margins, who is now getting into the market for issuing credit cards to high risk borrowers, is offering cards with nearly 30% APR AND they require some amount of collateral up front. That should tell you all you need to know about the economics of this stuff.
So turning back to the proposed cap of 15%, it should be pretty obvious that such a law will force a lot of lenders out of the market and make it much harder for poor people with bad credit to get loans.
On June 10 2019 09:22 Dan HH wrote: [quote] You're arguing against a 'dumb policy' that doesn't exist, which is your specialty.
What you are arguing against: end predatory small loans by making high risk small loans unavailable
What people are trying to do: end predatory small loans by making high risk small loans available through non-predatory means, in Sanders' case through the postal service
The main reasons being (1) the phantasmagoric interest rates do not match the risk as you will see below and (2) the companies doing this do nothing else and have a very limited number of customers each.
You realize that that article proves my point even harder, right? First, it points out that the reason for the high interest rates is a function of the cost of operations and the credit risk of the lenders (albeit I presumed that the risk of the lenders was the bigger cost). But here's the really amusing thing: the article makes it clear that government intervention in the lending space is the real cause of the high interest rates. Banks and other institutions with lower capital and overhead costs who would be able to lend the money more cheaply can't do so because of federal regulations. Hence payday lenders filled the market void because there is a market demand for these loans (ie people need them). Put simply, the government is screwing over poor people by forcing them to use unregulated financial services that have higher capital costs.
And Sanders' solution to this is pure idiocy. Yes, let's fix a problem caused by government regulation by simply nationalizing the payday loan industry and running it through the post office, thereby having the taxpayer subsidize it. Everyone knows that the best solution to government problems is more government!
I do realize that you move to a different point every time you say something demonstrably wrong and claim that was it all along, in this case to something as feeble as 'government bad' which is not what was being discussed. First you argue against a non-existent plan to make small loans unavailable, now you argue against a non-existent plan to subsidize small loans. It's always a wild ride.
But I fail to see any arguments in your last paragraph for why Sanders' solution is idiocy, unless we're to count your suggestion that a problem created by an entity can not be fixed by the same entity. You throw words like dumb and idiocy way too much for how little you provide to show something is that way.
Clearly using the postal service would solve the issue of operating cost due to its ubiquitous presence. And as pointed out, the fees can be several times lower than what is currently available in the high risk small loan market without running at a loss or needing to be subsidized.
While that article shows for how little banks could offer those services as well, there's still the issue of would. Banks have their own predatory practices, why would they be content with lower margins than necessary for small loans if not for regulation? It would still be a net upgrade over the current situation of course, but determining which solution to pursue is not something to be done solely on how spooked you are about government.
I haven't moved the goal posts at all. The problem is that y'all are coming at my original post from multiple, disparate angles that don't even fully capture what Bernie means by "ending predatory lending." Here's a hint: he's not just talking about payday loans. He wants to cap interest on all other consumer debt at 15%. Accordingly, I 100% stand by my original statement of:
You realize that "ending predatory lending" roughly equates to "ending lending for poor people," right? It's a dumb policy because it is going to make it much harder for many people to get access to any kind of capital when they need it.
What exactly is the problem with that? A loan with 15% interest annually might not yet qualify as "predatory", but it is already pretty close. I doubt that there are very many situations where taking a loan at 15% interest is actually a good idea. Very easy to get caught in a debt trap with that.
Payday loans, however, have interest rates in the 100s of percents. And if that is not predatory, i cannot see what is.
Capping interest rates reduces lending to high risk (ie poor) borrowers per my previous posts.
Your assuming they need to charge more than 15% to make a profit.
Seems like a pretty safe assumption to me. Just look at the credit card industry. It's highly competitive. The rates there are market rates.
You defeat your own point because later you point out how visa actually makes there money, which is numbers of transactions. So they can afford to way over advance people since they make so much on the transaction. And because there is no paycheck they have taken as collateral, or car title or whatever their debt is arguably riskier. Not to mention all the expense of their loyalty programs. I don't know enough about the numbers to say that for sure they can't turn a profit/break even at 15% when they have no need to make a profit and already have all the infrastructure and physical locations. But you can't say that they can't, the difference is I know enough about the industry to know I don't know enough to make the kind of bold proclamations you are comfortable with.
No, I did not defeat my own point.
Let me explain how Visa makes money because none of you understands it. Visa is a financial services company that runs a network for processing electronic transactions. Visa licenses this network to financial institutions who issue credit cards that use the Visa network. Visa does not issue the credit cards. Visa makes money from the merchant fees associated with each transaction on the cards. In other words, if you buy something with your credit card at a store, the store pays the merchant fee which is typically somewhere between 1.5% and 4% of the price depending upon the card and the type of transaction (in practice, this merchant fee gets divided up between Visa and the financial institution, and sometimes to the consumer, but we'll skip that for now). Visa has no interest in the debt that you now owe on the transaction. Instead, the financial institution that issues the card holds the debt. They're the ones who are ultimately responsible for setting the interest rates --- not Visa. So when GH starts spouting off about how Visa has high enough profit margins to support providing consumers with credit cards that carry lower interest rates, he's making an argument that is grounded in complete ignorance of how Visa and its credits cards actually work. This is why I said that he was asking the wrong question.
So if we turn to the question of the profitability of card issuers (ie the financial companies that hold the debt), it should be pretty obvious that capping interest at 15% is unsustainable for higher risk debt. A 15% return implies a low profit margin even presuming that all debts are paid (which is ludicrous). I don't know what the operational costs are, but the profit margin is necessarily going to be well-below 15% because it costs money to run the business. Throw in the incidence of bad debt, and we're likely in an unprofitable situation, and certainly one where the financial institution can find better returns on investment. And again, this should be obvious because none of the many, many issuers of credit cards offer 15% rates to high risk borrowers. If they could make money on it, you best that they would. Even Amazon, the king of slim margins, who is now getting into the market for issuing credit cards to high risk borrowers, is offering cards with nearly 30% APR AND they require some amount of collateral up front. That should tell you all you need to know about the economics of this stuff.
So turning back to the proposed cap of 15%, it should be pretty obvious that such a law will force a lot of lenders out of the market and make it much harder for poor people with bad credit to get loans.
The first part of the bold is true, and good they shouldn't exist at all. The second part is presuming there's not an alternative to exploitative loans with "acceptable" profits, like non-profit loans designed to be sustainable instead of profitable/exploitative.
If they cap rates, companies will change their lending practices, that's fairly obvious I can't imagine that's a point of contention. If you want to cap rates your gonna have to also have the govt start offering the loans them selves or at least insure the lending companies. I think that's a bad idea, but i assume you GH and Jimmi might be on board with that. You can't force the companies to lend, depending on where the mythical cap is it would have less or more of an impact.
Triple Canadian poster party here. I also don't like the idea of saddling poor or high risk people with debt at insane rates. Is this a case where we would be better off without these options? I am seriously not sure, taking these options off the table will have a benefit to some, but not to others. We'd have to see some real stats on it, it may turnout that payday loans, No credit check CC's are not as evil as we all likely think they are, or they could be worse. There is lots of companies out there who will allow you to refinance your debt ect, buying it out and then extending your terms at a lower rate, they must be making money, so that is always an option, but maybe they are as "bad" as the initial company.
I assume everyone here can imagine a scenario where they would or might have had to take advantage of one of these, likely most of us haven't had to, but we can imagine. There's a way to do it right and wrong, if your at the point of using these systems, you can still skirt the pain if you know what your doing, and the need is great enough. Maybe education is the answer.
On June 13 2019 02:19 Taelshin wrote: Triple Canadian poster party here. I also don't like the idea of saddling poor or high risk people with debt at insane rates. Is this a case where we would be better off without these options? I am seriously not sure, taking these options off the table will have a benefit to some, but not to others. We'd have to see some real stats on it, it may turnout that payday loans, No credit check CC's are not as evil as we all likely think they are, or they could be worse. There is lots of companies out there who will allow you to refinance your debt ect, buying it out and then extending your terms at a lower rate, they must be making money, so that is always an option, but maybe they are as "bad" as the initial company.
I assume everyone here can imagine a scenario where they would or might have had to take advantage of one of these, likely most of us haven't had to, but we can imagine. There's a way to do it right and wrong, if your at the point of using these systems, you can still skirt the pain if you know what your doing, and the need is great enough. Maybe education is the answer.
They figured out all the way back in biblical days that payday lenders were despicable and shouldn't exist. Rather than a system we try to regulate into not being the predatory industry it is in it's very essence, we should just care for the least among us.
EPT
