Payday parasites

[dcsmart]

THE COMPANY store that used to prey on coal miners and their families, locking them forever into debt bondage, is mostly gone. But capitalism, always innovative, keeps coming up with new ways to prey on workers and pick their pockets.

The inglorious roots of the now infamous sub-prime mortgage lending "industry" were in storefront moneylenders, known as retail consumer finance offices. Some employed their own repo men to take back consumer goods purchased on defaulted loans. Sometimes, the loan officer and repo man was one and the same person.

In the 1970s, some retail consumer finance offices began to make high-risk mortgage loans. "Respectable" banks and corporations later followed them into this lucrative market. They're still reeling from the experience.

But the modern version of the storefront moneylender--the payday loan industry--is making more loans than ever.

Payday loans are short-term loans that are paid back quickly--when the next paycheck arrives. The fee for the advance, while seeming to be relatively modest, adds up to an outrageous rate when calculated on an annual basis, like interest rates are for other loans.

The payday loan sharks are hoping to seize the opportunity presented by the recession, and expand into the suburbs and online. As other routes for credit (credit cards, above-the-board bank loans and mortgages) become harder to come by, payday lenders are set to take up the slack--and rake in the cash.

Workers today are essentially compelled to go into debt. While they aren't directly forced into debt by their bosses (as was the case with the old-time company stores), they have to resort to the likes of payday loans because paychecks fail to pay the rent and put food on the table.

For example, the Center for Responsible Lending (CRL) estimates that every year, more than 15 million U.S. workers pay nearly $8 billion to borrow $50 billion from payday lenders--an astonishing rate of profit for these lenders. Many predict that the recession will only cause these numbers to grow.
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FULL ARTICLE
http://socialistworker.org/2009/01/22/payday-parasites

[tomreedtoon]

1. These should be eliminated pronto.

It doesn't matter that some of these places offer "free money orders" or have cute talking buildings in their ads. They are evil, sleazy and dangerous. And there are lots of them popping up in my neighborhood.

[yurbud]

2. easy way to eliminate them: raise minimum wage to a living wage so people don't need them

[Number_Six]

3. Nope!

No minimum wage. A living wage. One that's high enough so that nobody needs the payday loan sharks, and yes, the economy will crank back up.

[yurbud]

4. we agree in principle if not semantics