Ignorance disguised as advice
December 18, 2008 | Kansas, alternatives, industry, states | Comments (2)The Lawrence Journal World derides the number of payday lending stores–six–in a downtown area. However, the writer can’t fathom the economic law of supply and demand:
It amazes me that there is enough business to keep all of these companies going.
The writer should consider it good news that there are a number of stores competing with each, driving prices as low as they can go.
Comments»
The writer of this article makes an interesting point about the banking industry. The consolidation and mergers in this industry (which has accelerated this year) has only served to eliminate the small community banks that were more consumer-friendly. Banking has become a ruthless competition of wealth-acquisition. The large corporations and their wealthy stockholders are far more out of touch with everyday citizens than the (soon to be obsolete) small community banks. They simply don’t care because the bigger they are, the more unimportant one small customer is. The payday industry began and grew because of this huge hole in the market place created by the banks concentrating on bigger loans that make bigger money. Collusion between big banks allows them to charge outrageous fees for bounced checks and overdrafts. It seems to me that the government should be breaking up these companies, not combining them. It would make sense for us to learn from the current situation that the best way to prevent companies from becoming ‘to big to fail’ is to break them up and let the competitive units succeed while the non-competitive units fail. This way, no one gets a ‘bailout’, the market determines prices, level of service, and everything else. Then, we have market equilibrium (real capitalism) instead of fewer, larger institutions that have received government (taxpayer) money to continue the process of consolidation and nationalization (which sounds an awful lot like socialism, but without the interests of the people really in mind).
I’m not sure if Congress really knows what they are doing. I think they are panicking and nothing good ever comes out of that.
The author of “The LawrenceJournal World” says, “Another company offers a $25 refund if you refer a friend. Friends don’t let friends borrow at these rates. I know. If I had a friend who was desperate and I didn’t have the money either, I would probably refer a friend.”
As the owner of several payday loan stores I can assure you a GREAT NUMBER of our clients are referred by family and friends of those in need of our payday loan products.
Typically, friends and family members have already been “tapped” by borrowers in need! The borrowers failed to pay back the friend or family member so the borrowers are sent to us.
If I heard it once I heard it 1000 times, “My son needs $300 to fix his car to get to work. If I loan him the money I’ll never see it again. Can I bring him down to your payday loan store so you can lend him the money”?
The “son” has nowhere left to go! Credit cards, friends, family, employer have all been used and abused.