What if payday loans go away?
November 9, 2009 | alternatives, federal legislation, industry | Comments (0)Credit Union Times contemplates this:
“Credit union people who have been around for a few years can tell many stories about walking through the worksite and making small loans to workers out of hand carried cash boxes, after securing their signatures on brief notes. But somewhere along the way credit unions decided small loans were unprofitable and walked away from them. So the payday lenders came along, recognized a niche market and need, and learned that small, short-term loans could be made profitably,” she added.
But David John, a financial services and banking analyst with the politically conservative Heritage Foundation, noted that the financial lives of most Americans has changed since then and that banks and credit unions need to recognize that they have helped create the demand for these sorts of small, short-term loans.
“Banks and credit unions always used to do that sort of lending to their strong members and customers, but its not clear they would do that sort of lending to some of their more marginal customers or members,” John said, “and those are the folks who are more likely to need a payday loan.”
While banks and credit unions continue their naval gazing, payday lenders will continue to make short-term loans.
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