Payday Loan song

May 30, 2011 | By | 3 Replies More

To put this topic in perspective, think of the terrible old banker, Mr. Potter, featured in the Christmas classic, “It’s a Wonderful Life.” Mr. Potter drove a very hard bargain, but he wanted customers to actually pay off their loans.  Keep in mind that Mr. Potter was lending out money at about 2%. If Mr. Potter could have charge as much as many credit card companies, he would want to stretch out his repayment plans. And if he could charge 500%, he might not actually ever want his loans to be repaid. Welcome to the world of payday lending.

During the day I work as a consumer lawyer at the Campbell Law Firm in St. Louis, Missouri. My firm has filed several class actions again payday lenders based on their outrageous lending practices–on many occasions they systematically ignore the weak state laws that ostensibly regulate their conduct.   At my firm, we’ve met undeniable facts demonstrating that payday lenders make most of their money from people they would term “repeat customers,” but these people should more accurately be referred to as people who are trapped in high interest loans or 400% or even 500% interest.

The fact that these customers are trapped in debt is not an accident.  Payday lenders dispense their loans without any meaningful underwriting process; they typically offer to lend their customers enough money (up to $500 in many states) that the customer will need to come crawling back into the store every two weeks to renew the loan.  Many lenders eventually dispense with these renewals and, instead, convert the customer to a long series of fake new loans. I’ve met payday borrowers who have paid $2,000 interest on a payday loan and who still owe the original $500 they borrowed. Apparently, these numbers don’t mean much to payday companies or members of Congress, but they are destroying the well-being of the poor and working-poor. For more information, see the following:

The Center for Responsible Lending is an excellent resource for understanding payday loans.

Here is a CRL article titled Payday Lending in a Nutshell.

Banks are quietly profiting from payday lending.

Payday opponents struggle to get a hearing.

Time for a national usury law.

Predatory lenders abuse pre-dispute mandatory arbitration provisions, to include class waivers to immunize themselves from lawsuits. The situation has recently gotten much worse with the United States Supreme Court decision of AT&T v Concepcion.

The existence of payday lenders serves as a visible example of the dysfunctionality and corruption of our political process. Congress (and many state legislatures) are so incredibly beholden to campaign contributions that they can’t even summon the common decency of cleaning the streets of modern-day loan sharks. This article (and video) is ostensibly about payday loans, but it’s also about the devastation that private money does to the political process.

Payday Loan Song

Looking out my window, wondrin’ how it all came to this
The constant phone calls, the nasty letters all give me stress
I took out a little payday loan, just to pay my doctor bills.
At four hundred percent interest, this crushing loan is making me ill.

The lady at the payday store, she flashed me a big smile and she said
A payday loan will help you. It will solve your money problems, she said.
Every two weeks I go back, trying to pay it off, but there’s no way.
Now I’m a lifetime debtor cause I signed up at the land of payday.

They hand money just like candy, and tell you “take a loan on a lark”
But now I’m broke and hopeless, cause my lender’s a modern loan shark.
. . . a modern loan shark.

It goes on and on and on.

[Why do our legislators do this to us?
Someone should put these guys in jail.]

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Category: Consumer Protection, Fraud, music, Politics, Quality of Life, snake oil

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (3)

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  1. Erika Price says:

    I find it outrageous that more people aren't aghast at the actions of payday lenders. The only reason I can think of (besides apathy) for this is that middle-class voters see payday loans as a poor person's problem. There is probably a lot of victim-blaming at work, too: If those people are too irresponsible to budget their paychecks, they deserve to pay high interest rates. I suspect there is racial prejudice at work in this, too. But these are just gut-level intuitions. Does this jibe with your experience fighting these lenders, Erich? Is this a political nonissue because the victims of payday lenders are poor, and frequently minorities, and middle class voters don't sympathize with their plight? Or is it simple ignorance?

    • Erich Vieth says:

      Erika: I do think that there is a massive lack of empathy. Also, a lack of foresight. If we allow predatory lenders to suck the money out of semi-desperate and desperate folks, many of them admittedly afflicted with innumeracy, we allow our neighborhoods to crumble. And if it is not YOUR neighborhood, it might the one nearby or one not so far away. This is not a race issue, though you'll find many payday lenders in poor areas, many of which are heavily populated by African-Americans. These payday lenders are happy to take the money of Caucasian folks too.

      The payday lenders insist that people need them. Well . . . 20 years ago we didn't have any payday lenders and I don't remember anyone going around wishing we hand them. "I wish someone would lend me money at 450% . . ." Some states have kicked these guys out completely. Other states are working at it, but it's not easy when the conservatives go around enamored by companies that make money, and especially enamored by Laissez-faire–the "right to choose" a 500% loan.

  2. Tim Hogan says:

    OK, was that Carlos Santana I heard in those jazzy riffs? Down with the Pay Day lenders!

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