Dean Starkman defends CRL, trips over self
But let’s look at his case against the Forbes article. It’s full of holes. Click here if you missed part one of this story.
- “Payday loans, by the way, are even ranker than subprime mortgage lending, which, despite years of diligent research in sub-basement laboratories, has yet to find a way to charge the working poor 400 percent annual interest rates, as payday lenders do.
The subprime mortgage crisis has hit hundreds of thousands of families in America. It has put hundreds of thousands of people out of their homes, Mr. Starkman. Do not condescend to say that payday loans have had the same effect. It insults the intelligence of your readers. We already know that payday loans are not annual loans, so the 400 percent APR figure you bandy about is a propagandist’s toy. Self-Help, Eakes’ baby and forerunner/forefather to the Center For Responsible Lending, had everything to do with the subprime crisis and America’s economic collapse. Eakes admits this. And since studies have shown that 90 percent of payday loan customers pay on time, that 400 percent APR remains a myth. Try again, Dean.
Payday loans, Goldman Sachs… these two are NOT the same
- “The financial-services industry – from the payday crews to Goldman Sachs – is rightly being blamed for breathtaking corruption that led to the cratering of the U.S. economy and global credit markets.”
Based upon your career history previous to this article, I would conclude that you make a habit of such ridiculous comparisons. But there it is. You are placing payday lenders and Goldman Sachs in the same boat. And of course, you neglect to mention Self-Help, Herbert Sandler or Marvin Eakes‘ role in the subprime meltdown. Payday loans don’t come anywhere close to that kind of damage, they are government-regulated and they inform customers of all fees up front. No surprises. Click here for more of Starkman’s self-satisfied but errant analysis.
Payday loans are worse than subprime lending…if you don’t know anything. The thing is that no lender in their right mind would have made those loans unless they were goaded into it by special interest groups. The demand is there (obviously people want houses) but supplying it was have been far too dangerous. Had there not been prodding, they wouldn’t have made those subprime loans. Payday loans arose out of a natural market demand, and have to be able to survive as a business – they don’t get federal subsidies, or multinational status that gives them the pedigree that firms like Citigroup have…and don’t deserve!
Short terms loans are not worse than subprime lending, and in fact they are a better choice for many people than long term loans or even credit cards. People get caught up in the interest and not the actual dollars involved. I’ve seen credit cards for bad credit people that have annual fees, monthly fees, buy something and we charge your more fees, and of course, they only want you to pay the minimum each month so that you can drag that $100 purchase over two years and wind up paying 3 times as much as borrowed. Yet, we say that short term loans are bad. They are heavily regulated and can only lend certain amounts and charge certain amounts, so actually these are more upfront, honest, and practical loans than even credit cards are.