A good read
January 22, 2010 | industry, positive media coverage, research | Comments (0)Thomas Sowell, the free market economist, thinker, educator and columnist, has a new book out, “Intellectuals and Society.” There’s a wonderful section that defends payday lending and other services that represent private sector solutions to the needs of working Americans. You can get Sowell’s book here.
And here’s a column from last April that Sowell wrote in defense of payday lending.
No, not again
January 13, 2010 | South Carolina, industry, research | Comments (0)Given the intensity of last year’s legislative fight in South Carolina, we don’t expect the legislature to want to revisit payday lending, but this blurb in a South Carolina paper discussing the 2020 session caught my eye:
PAYDAY LENDING In 2009, the S.C. legislature passed its first restrictions on the predatory practice of payday lending, the notorious 400 percent loans on small amounts that entrap the poor. State Rep. Alan Clemmons, a champion of the reforms, described the bill (which only limits the number of loans a consumer could take, not the amount of interest payments that can accrue) as watered down and really only a start. We agree and continue to support a 36 percent cap on interest that both Clemmons (H. 3048, still technically alive) and the national Center for Responsible Lending advocate.
Correlation is not causation
January 12, 2010 | industry, positive media coverage, research | Comments (0)Econ4U takes on an anti-payday lending “study”:
An unfortunate example of this error appeared recently in a magazine called The American Banker. Two sociology professors from George Washington University (GWU) took to the opinion page to promote a recent study which claims an increase in the concentration of payday lending stores causes an increase in violent crime.
The big problem with such a broad claim is that the study in question finds correlation between payday lenders and violent crime, not causation. This kind of academic overreach is not only irresponsible – it’s also dangerous. Strong conclusions based on faulty logic could cause policymakers to take rash actions with harmful unintended consequences for the poorest among us.
The overdraft time bomb
November 9, 2009 | federal legislation, industry, regulation, research | Comments (0)From a speech given at a banking conference in New Jersey:
At 44.5% of all banks and credit unions, overdraft income exceeds net income, Nicholas J. Ketcha Jr., an executive managing director at the consulting firm FinPro Inc., told bankers at his company’s annual conference Thursday in Mountain Lakes, N.J.
He said that the political pressure to drastically limit such fees is intensifying and that community banks – which have much to lose – are failing to effectively respond to the rhetoric in Washington.
“I’ve always said overdraft protection programs were a timebomb waiting to go off,” said Ketcha, a former director of supervision at the Federal Deposit Insurance Corp. “Well, that timebomb went off.”
Banks are mishandling this. If they would agree to simple disclosure and complete transparency, they could mitigate the political hostility.
A confederacy of dunces
November 6, 2009 | industry, industry critics, research | Comments (0)Larry Meyers takes on the sociology study the criticizes payday lenders:
Regular readers of my column should recognize the name of Uber-Doofus Dr. Stephen Graves. I eviscerated his clumsy attack on payday lenders months ago. Now, he is back for an encore along with two asylum escapees from GWU in a brand new working paper: “Does Fringe Banking Exacerbate Neighborhood Crime Rates? Social Disorganization and the Ecology of Payday Lending”, which I have lovingly subtitled, “3 Buffoons in the Land of Make-Believe”.
The paper’s credibility should be immediately suspect for several reasons beyond Graves’ involvement. A scan of sources quoted for data within the paper would yield a list of biased papers with poor methodology riddled with sampling bias. Out of the numerous truly independent, non-biased, methodologically sound studies available, not a single one was utilized in the paper. The reason for avoiding these sources is clear: all of the real studies done contradict the biased and predetermined ideological positioning of this paper’s authors.
And make no mistake — Graves has already proven himself to be a clueless ideologue. That none of the truly great studies were cited only proves the point further.
Yes, and studies from ideologues should be discredited.
Laughable (and very flawed) logic
November 3, 2009 | Uncategorized, research | Comments (0)A new paper uses “social disorganization theory” to make the case that (1) violent crime is higher in lower-income neighborhoods; (2) payday lenders locate in lower-income neighborhoods (3) therefore, payday loans cause violent crime. The conclusion is unsubstantiated and not supported by any evidence whatsoever.
The NBC affiliate in Los Angeles has covered the paper. Note: to the right of the story you can rate the story. Categories include: bored, laughable, intrigued…
Good news in Wisconsin
October 8, 2009 | Wisconsin, industry, research | Comments (0)From the story:
Assembly Speaker Mike Sheridan (D-Janesville) said recently that the bill to cap lending rates at 36% goes “too far,” and he assigned the bill to a committee of lawmakers skeptical of the plan.
The developments come as the payday loan industry has hired 30 lobbyists and a public relations firm. Last year, employees of payday and title lenders plugged more than $140,000 into state campaign coffers.
Learn before you write
September 3, 2009 | industry, research | Comments (0)Does this guy even know how payday loans work?:
With payday loans, the company knows that you need the money now and you really don’t have any other options. Knowing this, they can apply almost any fee or interest rate to your loan and you are likely to pay it.
Payday loans have flat fees. Some of these fees or limits are set by state laws.
CFPA will not protect consumers
September 3, 2009 | alternatives, industry, research | Comments (0)Check the video in this Atlantic Monthly story. Professor Todd Zywicki of George Mason University makes this point:
People get into trouble because hyperbolic discounting, or an insurmountable crisis, leads them to borrow more money than they can reasonably pay back. By the time a 5% increase in your credit card interest rate spells financial ruin, you’ve been in deep trouble for several years
Payday loans benefit families
August 31, 2009 | Missouri, Springfield News Leader, industry, regulation, research | Comments (0)From a letter in the Springfield News Leader from QC’s Tom Linafelt:
Short-term payday loans each year help thousands of Missouri families overcome unexpected financial circumstances and avoid more-expensive fees associated with bounced checks and late bill payments. In addition to being more expensive, these options negatively impact credit ratings and may hurt a consumer’s access to employment, housing, insurance and other credit options.
And with credits cards and other alternatives being squeezed, this short-term credit option is needed more than ever.
