Wednesday, February 15, 2006

Michelle Leder: How the Other Half Banks

All the former underground businesses of organized crime are now comfortably operated by corporations who are making huge profits from vice. Think about it, corporations (and the government) run gambling/numbers operations, supply drugs to make us forgot about our problems, distribute pornography (see Eric Schlosser posting below), etc. Now some corporations have become the biggest sharks in the short-term loan business...


"How the Other Half Banks: The depressing, amazing 'payday loan' business."
By Michelle Leder

Many Americans—particularly those who don't live paycheck to paycheck—are unfamiliar with the payday-loan industry, one of the nation's fastest-growing and most depressing businesses. Payday advance companies offer tiny, short-term loans—a few hundred bucks for a few weeks—while charging annual interest rates that top 500 percent. Borrow $200 today, pay back $240 or $250 on payday. (Some may think that charging those kinds of rates must be illegal, that it's equivalent to loan sharking by mobsters. In this Slate article, Brendan Koerner explained why loan sharking, which actually charges much lower rates, is against the law and payday loans aren't.)

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