Court stomps on Manitoba's attempt to regulate payday loans

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Fidel

Hudson is an outspoken opponent of neoliberal ideology and usury in general. We need a new way. This one's broken.

Snert Snert's picture

So he pronounces.  Thanks.

Maybe he should try lending.  If he's willing to take less than "obscene" profits he should make a small fortune, while bankrupting the other lenders who won't compete.

Fidel

Snert wrote:

So he pronounces.  Thanks.

Maybe he should try lending.  If he's willing to take less than "obscene" profits he should make a small fortune, while bankrupting the other lenders who won't compete.

There is a new way coming within the next ten years. The neoliberal baloney will be out the door at some point, and our weak and ineffective political stooges in Ottawa and Queen's Perks will eventually have to promise voters they intend to govern with public interests in mind.

 

Snert Snert's picture

I wish that had anything to do with this thread.

Do you just copy and paste from manifestos you find on the web?

Fidel

Ya and if clues were shoes, you'd be barefoot. Under the neoliberal baloney, provinces are supposed to retain the right to regulate and tax industries as governments see fit. It's not happening though, and it's because provincial economies are dependent on marauding capital like no other time in Canadian history. These parasitic loan sharking companies do provide a few jobs and pay a few taxes. We don't have to agree with the top-down federal-provincial setup in this country, and we do have the right to protest against it on the one day that counts every four years.

Unionist

It's not worth debating this point with Snert, who purports that exploitation and profitmongering don't really exist. Proof: if they did, someone would just charge a tad less, and everyone would be happy - QED. But he doesn't seem to want to acknowledge that that's precisely the bankrupt thesis of the Invisible Hand of the Free Market - that capitalism is not unfettered in this society, and that fettered or not, it does not provide the best value at the best prices for the impoverished masses.

He will never grasp why governments feel the need to restrict excessive interest rates on loans - after all, if they're really "excessive", won't entrepeneurs just march in and shave a bit off and make a bundle!?

Neither he nor abnormal will hazard a guess at what they think would be a rate of interest that would be fair and viable. The moment they do, their thesis will come crashing down - which is why they won't answer the question which they themselves have posited.

Snert Snert's picture

Here's the thing.  If I open a convenience store, and I decide that in order to make lots of money for myself, I'm going to charge $6 for a litre of milk and $6 for a dozen eggs, someone is going to open up a store near me and sell the same milk and the same eggs for $3.  They'll poach my business, and unless I'm willing to cut my own margin in order to be competitive, I'll go under.

An exception would be the far, far north, where the prohibitive costs of fresh milk and fresh eggs is likely to prevent my competition from undercutting me.  Neither I, nor my competition, will be making money hand over fist, even at $6 for milk and eggs, because in that situation, both my and my competition's costs are too high.

Another exception could, in theory, be a situation wherein I and my "competition" reach a secret deal to "fix" prices so that both of us can charge $6 for milk and eggs, and make money hand over fist, but we'd better be ready to allow any and all competition into our little cartel, because the first convenience store to chop the price of milk and eggs will end up beating us all.

So failing some kind of cartel, abnormal's question is an excellent one, for which I'm confident you have no answer:  why is nobody shaving their margin in the payday loan business?  Is it a cartel?  Is the risk such that margins are low, even though rates are high?  Or have financial institutions decided, altruistically and unanimously, not to tamper with MoneyMart's "obscene profits" out of the goodness of their hearts? 

My guess is the second one:  the risk and the costs are higher than you think they are.  I know this is in contradiction to the established dogma that payday loan companies are greedy parasites who stick it to the poor because they can.  And I doubt you really want to have to give that up.

Unionist

Snert wrote:

 

My guess is the second one:  the risk and the costs are higher than you think they are.  I know this is in contradiction to the established dogma that payday loan companies are greedy parasites who stick it to the poor because they can.  And I doubt you really want to have to give that up.

See, Snert, that's where your haste comes in. I totally fully agree with you. In fact, I indicated as much upthread:

Unionist wrote:
How far would you cut fees and still be able to finance bricks, mortar, labour, and risk, abnormal, given the short-term nature of the loans?

Missed that, didn't you? Abnormal wisely evaded that question and continues to do so. You see, I'm quite convinced that these lowlife bastard loan sharks are indeed charging rates that "fairly" reflect their cost of doing business. That's why I fully support the efforts of the NDP government to restrict those rates and thereby drive them screaming out of business. There are some forms of private enterprise which deserve to be put, gently, to death.

 

Snert Snert's picture

Quote:
You see, I'm quite convinced that these lowlife bastard loan sharks are indeed charging rates that "fairly" reflect their cost of doing business. That's why I fully support the efforts of the NDP government to restrict those rates and thereby drive them screaming out of business. There are some forms of private enterprise which deserve to be put, gently, to death.

 

Ah. And then do we follow up with "force banks, credit unions etc. to provide replacement short-term loans at extremely reasonable rates as part of their right to do business in our communities" and is that a hidden attempt to drive them out of business too?

Fidel

Unionist wrote:
He will never grasp why governments feel the need to restrict excessive interest rates on loans - after all, if they're really "excessive", won't entrepeneurs just march in and shave a bit off and make a bundle!?

Excellent post. And they will never grasp that conditions are ripe for parasitic payday loans to rip-off the poor because a whole range of pro-market conditions are enforced in Canada by the feds and producing large sections of the US and Canadian populations who live paycheque to paycheque while, at the same time, overall cost of living rises. Abysmal savings rates and negative savings rates are conditions that have arisen for a purpose in this country in order that millions of people become more depdendent and more reliant on the free market voodoo as was the case in 1970's Chile, 1990's Russia and Eastern Europe through today. A range of repressive anti-labour legislations have been enacted across Canada since the 1980's, and economic think tanks once considered voices on the lunatic rightwing fringe of the debate are now bending the ears of our 22 percent stooges in Ottawa. Neoliberalism and democracy are found to be incompatible with democracy around the world. It was broken years ago.

Fidel

It's a total waste of time and effort, Unionist. He parrots the same rigtwing bs over and over in desperate hope that someone will follow his trail of nonsense into the even darker side alley where nothing good can happen. Stay in the light and ignore his Parseltongue.

Snert Snert's picture

I'm sure you weren't burdened with an overabundance of courage, but if you're actually addressing me (and yes, you are) why not grow up and address me directly?  Your pants might fit a little tighter.

Fidel

I would, but you keep typing the same smelly bullshit over and over. No courage needed just a clothespin. Pew! B.S. windshield wipers are switched on as of now. So much better.

Unionist

Snert wrote:

 

Ah. And then do we follow up with "force banks, credit unions etc. to provide replacement short-term loans at extremely reasonable rates as part of their right to do business in our communities" and is that a hidden attempt to drive them out of business too?

Not at all. It's their price of doing business - giving back an infinitesimal portion of their pornographic profit margins to the greater good, with the added benefit of driving the smaller crooks into oblivion. Why - is there something about social responsibility that conflicts with your sympathy for the banking billionaires?

Snert Snert's picture

Quote:
Why - is there something about social responsibility that conflicts with your sympathy for the banking billionaires?

 

I guess for starters I don't define handing out short-term, high-risk loans at loss leader rates as "social responsibility". I'm not sure how banks somehow took on that responsiblity (and no, the simple fact that banks have money is not sufficient to obligate them to throw it away, as I see it).

 

But hey, maybe the banks could give out very generous, say sub prime mortgages to people who have a questionable ability to pay them back. That would be a nice gesture of social responsibility, yes? Mortgages for everyone!

 

Here's a better idea: let the government take some of the tax they receive from banks and start (and administer) an emergency loan fund. It's the government's job to function as a social safety net, not the banks'.

G. Muffin

Snert, sorry for stalking you.

Oops.

G. Muffin

I've got an even better idea.

PAYDAY LOANS suck.

Stop undertaking to commit usury. Yeah, I'm talking to you!!!

E.P.Houle

80% of what is deserately needed is usary. A gov't cheque should be cleared at face value. The money is in the pipe.

E.P.Houle

Out west here, Vancity(a co-op) charges nothing; they are glad to have the bucks for the few hours before they are gone. I can't seem to understand where your rip-off artists are. Don't you have Co-ops?

E.P.Houle

Out west here, Vancity(a co-op) charges nothing; they are glad to have the bucks for the few hours before they are gone. I can't seem to understand where your rip-off artists are. Don't you have Co-ops?

Unionist

[url=http://www.cbc.ca/canada/manitoba/story/2010/04/24/mb-payday-loan-rules.... sharks complain Manitoba's regulations are too restrictive[/url]

abnormal

Unionist wrote:

Unionist wrote:
How far would you cut fees and still be able to finance bricks, mortar, labour, and risk, abnormal, given the short-term nature of the loans?

Missed that, didn't you? Abnormal wisely evaded that question and continues to do so. You see, I'm quite convinced that these lowlife bastard loan sharks are indeed charging rates that "fairly" reflect their cost of doing business. That's why I fully support the efforts of the NDP government to restrict those rates and thereby drive them screaming out of business. There are some forms of private enterprise which deserve to be put, gently, to death.

 

Sorry - just saw this.

I thought everyone's complaint with payday loan companies was that they were making obscene profits.  I'm glad to see you don't think so.  And, all I've said is that IF they're making obscene profits someone should be able to move in and undercut them.

I have no problem with the payday loan companies being put out of business.  Of course that means that their customers have to find an alternative.  With rare exceptions the banks aren't in those neighbourhoods and, even if they were, this type of loan doesn't fit their business model.  (And, if they did decide to move into this line of business I think you just argued that they'd have to charge the same sort of rates the payday loan companies do in order to cover their costs?)

Unionist

abnormal wrote:

Sorry - just saw this.

I thought everyone's complaint with payday loan companies was that they were making obscene profits.  I'm glad to see you don't think so.  And, all I've said is that IF they're making obscene profits someone should be able to move in and undercut them.

I have no problem with the payday loan companies being put out of business.  Of course that means that their customers have to find an alternative.  With rare exceptions the banks aren't in those neighbourhoods and, even if they were, this type of loan doesn't fit their business model.  (And, if they did decide to move into this line of business I think you just argued that they'd have to charge the same sort of rates the payday loan companies do in order to cover their costs?)

Abnormal, I can understand you may not have seen my post, but now that you're back, why not read the whole thread? Here is what I proposed to deal with the problem:

Unionist wrote:
... ban usury by legislative coercion, and force banks, credit unions etc. to provide replacement short-term loans at extremely reasonable rates as part of their right to do business in our communities.

I don't care about anyone's obscene profits. The problem with payday loan sharks is the damage they do to the poor - irrespective of whether they make lots of money or just a little while doing it.

Banks and credit unions can do the same business at far lower rates of interest, because of economies of scale. They can (horrors) even absorb a loss in part of their operations, if the government tells them it's a cost of doing business at all.

Anyway, that's my solution, for what it's worth. It could be implemented tomorrow. There's actually still time to start it today, especially in the western time zones.

 

jas

It's not just about being able to get short term loans, Unionist. It's about having deposit and withdrawal services within the community itself so people don't have to bus or cab somewhere to get their cash.

Unionist

Where there's a will, there's a way:

[url=http://www.theglobeandmail.com/news/national/manitoba-looks-at-debit-car... looks at debit cards for welfare recipients[/url]

 

abnormal

Unionist wrote:
I don't care about anyone's obscene profits. The problem with payday loan sharks is the damage they do to the poor - irrespective of whether they make lots of money or just a little while doing it.

How exactly do they damage the poor?  If all they're doing is covering their costs plus a small profit what are the doing wrong.

Quote:
Banks and credit unions can do the same business at far lower rates of interest, because of economies of scale.

No, it's because of a little thing called risk adjusted capital.  

Quote:
They can (horrors) even absorb a loss in part of their operations, if the government tells them it's a cost of doing business at all.

Why should they provide a service at a loss?  If you want some sort of income distribution system the taxpayer should finance it, not the banks (after all, the costs will just be passed on to their other customers).

Unionist

Unionist wrote:

Where there's a will, there's a way:

[url=http://www.theglobeandmail.com/news/national/manitoba-looks-at-debit-car... looks at debit cards for welfare recipients[/url]

 

Whatever happened to this great idea? Anyone know?

 

ghoris

In general, I like this idea too, my only concern being that some future (i.e., Tory) government would place all sorts of restrictions on where the cards could or could not be used or accepted, and what they could or could not be used for.

It looks like it came up again about a year after the original article Unionist posted, but since then, nothing that I can find. Looks like they may have been scared off by failed attempts in B.C. and Alberta.

Province eyes welfare debit card

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