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Payday Lending from Your Friendly Banker

posted by Bob Lawless

The Consumerist just put up a post about who is financing the payday lenders. Chances are that you might do business with them. The Consumerist's chart (compiled from the National Consumer Law Center) is worth a look.

Comments

I'm one of that "broad" audience, & I thank you for your blogging efforts. I find your topics informative, most relevant & interesting. This one, for instance, has me wondering just how much our FED has jeopardized its credibility acceding to the short-sighted tactical profit measures of the deregulated financial sector it lobbied so strongly for.

I'm not sure I can go with bailey on his comment. Payday lenders may be a scourge, but depriving them of a source of capital is hardly the way to regulate them. In fact, it might even backfire. Payday lenders will prey on the poor regardless where they get their capital. I'm willing to wager that their sources of working capital in previous generations were a lot murkier and more salacious than Bank of America or Wells Fargo.

And let's not forget that these same sources of capital are underwriting the subprime mortgage market too. The positive (if there is one) is that they would seem likely to pull their credit lines when the underlying collateral value starts to erode, as might happen when the lending standards that are generating that collateral become too lax. And sure enough, that seems to have happened with New Century and, more recently, with one of Bear Stearns' hedge funds.

In all events, I'll take Wells Fargo any day over the previous generation's knee breakers.

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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