(05-10-2019 11:05 AM)Hambone10 Wrote:  To me it's more about inconsistent regulation and the laws of unintended consequences. Set a law that only people who employ more than 50 people have to follow and at the margin, you encourage companies to stay at 49 or (likely) go to 100.... or even 1000.

Or stay at 49 and hire the 1000 people in Poland. Polish middle class grows, ours shrinks. That might be a useful policy objective--or it might not.

The left doesn't understand two things:
1) The law of unintended consequences, and it's corollary,
2) The fact that people don't continue to do the same things once a law is changed, but rather respond to that law in a way that if perfectly legal but minimizes any harmful impact of that law on them.

(05-10-2019 11:03 AM)Kronke Wrote:  And big=more competitive certainly doesn't ring true in banking. My checking account is at a local credit union where they pay me monthly dividends and refund my ATM fees, not at Chase where you pay them a monthly service fee.

True, but Chase historically offers lots of things that your local credit union doesn't (I do the same as you now, but I used to travel internationally a lot and it was harder to get money at a good rate overseas or exchange currency etc without Chase... also my credit union wouldn't make a mortgage loan over 750k at the time).

It's only been recent where being able to deposit money at ANY ATM or via your phone has happened. Previously, having access to only a few branches and none out of the area vs hundreds in every state made a difference.



When my kids went off to school out of state, I made sure that they bank accounts that had local branches both where I was and where they were... so that in a worst case scenario, I could walk in and put emergency cash in their account from wherever I was and have it credit immediately.

Now you can't even put CASH into their account. You have to use a check or money order... which is of course subject to holds etc.... or do a wire transfer, even account to account which isn't immediate. You can send Western Union online in seconds, but they have to go pick it up. Sort of a hybrid.

Stupid regulations

(05-10-2019 10:26 AM)Oman Wrote:  

(05-10-2019 12:34 AM)HeartOfDixie Wrote:  

(05-09-2019 01:59 PM)Oman Wrote:  I would like to know what article of the constitution authorizes congress to set caps on interest rates.

... interstate commerce

That's an easy one.

Don't want to hijack the thread, but that's a broad interpretation of "interstate commerce", and while congress likes very much to regulate and tax whatever the he!! suits them, I would suggest this is a state issue. let the states set a limit if they want, it is not a responsibility expressly given to the Fed... did loans with interest even exist at the time of the framing?

Loans with interest have existed since the beginning of time, and at least since Shylock and his pound of flesh.

Interstate commerce is a massively broad topic that doubtlessly includes this since most credit card companies are extending credit and terms across state lines.

State or Federal, it makes littler difference since either can regulate it within the original and specific powers given to them.

(05-10-2019 11:05 AM)Hambone10 Wrote:  

(05-10-2019 10:46 AM)Kronke Wrote:  So,

29% = okay
116.73%= not okay

What amount of "crazy" is okay vs. not okay? The conservative argument is that both are okay, but you already shot yourself in the foot on that.

You're missing the point of 'conservative'.

The variety of regulation in some, but not in other industries creates hierarchies within them. You can't get a credit card with a 500 FICO.... not because there isn't a rate at which they could make money at it, but because regulations don't let them charge that rate. In a true free market, they could MAKE credit card loans to someone with a 50% interest rate

Paydays are less regulated/differently regulated.

The REAL economic rate for a payday loan for someone with a 500 score might be more like 30 or 50%... but they charge 100 because they know you don't have choices and they have less competition.

In recent times we've started to see apps that will compare such loans as well as loans at 30-50%... so the lines are clearly blurrier than they were a decade ago... but they still exist.

To me it's more about inconsistent regulation and the laws of unintended consequences. Set a law that only people who employ more than 50 people have to follow and at the margin, you encourage companies to stay at 49 or (likely) go to 100.... or even 1000.

Your economic argument makes sense, and I don't think anybody is arguing that point.

The issue is what is a fair number to take from a desperate person and what is the cost to society in the long run?

(05-10-2019 10:48 AM)VA49er Wrote:  

(05-10-2019 10:46 AM)Kronke Wrote:  

(05-10-2019 10:42 AM)ECUGrad07 Wrote:  

(05-10-2019 10:20 AM)Kronke Wrote:  

(05-10-2019 08:44 AM)ECUGrad07 Wrote:  I think the less the government controls, the better.

You don't HAVE to sign up for a credit card with a 29% APR. You just don't.

Now, payday loans? That is another story.

How is that another story? Payday loans are bad, but 29% credit cards aren't? Care to quantify? Where is the line where the government should get involved?

These charlie kirk/ben shapiro conservatives that shill for trillion dollar megacorporations aren't doing any favors for the right. People are annoyed with the alt-left, but they are increasingly becoming annoyed with these muh free market/muh private companies/at least it's not the goberment talking points.

The interest rates and fees on payday loans are WAY crazier than some 29% credit card.

Western Sky PayDay Loan

$5,000 Loan
84 monthly payments of $486.58.

$40,872.72 to pay off a $5,000 loan.

116.73% APR.

So,

29% = okay
116.73%= not okay

What amount of "crazy" is okay vs. not okay? The conservative argument is that both are okay, but you already shot yourself in the foot on that.

I have no issue with either considering how it's a choice to do either one. I do believe both should be regulated, like any other financial instrument. They are both options, and options have a cost.

There is such thing as a fair exchange--a square deal. When one person has the whip hand over the other it skews that into the realm of preying on people.

There was a time in this country when the concept of the square deal was paramount. That is gone. Supporting vagaries like "choice" supports the goals of those who will take until there is no more to take.

It is a moral issue. That shouldn't stand and the last thing the government needs to be involved in is supporting that pillaging.

(05-10-2019 10:20 AM)genda Wrote:  

(05-10-2019 09:08 AM)HeartOfDixie Wrote:  

(05-10-2019 08:44 AM)Hambone10 Wrote:  

(05-10-2019 08:20 AM)HeartOfDixie Wrote:  

(05-10-2019 06:51 AM)Fo Shizzle Wrote:  Im not a fan of regulation..but..Im also not a fan of predatory lending. Some level of balance is reasonable IMO.

Regulation of banks and the financial industry is inherent in both the Federal government and the state government though.

I think our usury laws should be restored across the country.

It is indefensible to trap people in poverty because of their desperation.

Don't generally disagree...

BUT

trapping people in poverty because of their desperation, caused at least in part by their poverty (If they're over-using credit cards?) It's a circuitous argument.

You can't simply say 15% and that's it. As some have suggested, you at least have to have it be libor or prime or fed funds + X%

But even that doesn't address the 'math' of credit cards.
If someone defaults, it's not like a mortgage where you likely get much if not all of your principal back... you usually get nothing back... So you're out not only the interest, but the principal.... which is 100%. You don't have to lose very often in order for a 5% or 10% or even 20% margin to be eliminated.

This isn't my area so I could be wrong in detail, but the concept is correct.... Pawn shops usually hold $5-600 worth of value for every $300 that they lend at 100-300%. THAT is usurious. It's actually insane. THEIR rate on that secured loan should be 10% (Prime +5 or whatever). Credit card companies hold nothing.

This group of people also are FAR more likely to be offering 'banking' services to the desperately poor.

Let's focus on the low-hanging fruit.

Why is 20% too high for an unsecured loan, but 50-300% isn't for a secured one?

I suspect because credit card companies are large with deep pockets, no warehouses and CEOs that make millions while most pawn shops are mom and pop.... but no reason it HAS to be that way

In fairness, this is not a new tradeoff. This isn't a new analysis. This isn't a new concept.

We've bad the bankruptcy code and credit cards for sometime prior to the current scheme. It's a tradeoff that favors regular people.

What is relatively new is Dodd-Frank/CARD act that limited ability to price higher risk customers properly, so that risk was spread to all customers, meaning APRs would increase for the base population. This is what I worry about when government gets involved in trying to make things "fair" to everyone, everyone gets equally screwed. Let's be honest, what will happen if APR is capped (esp without Prime indexing, which would open banks up to losing money every time they loan a dollar) is that customers with lower credit scores (< 750 FICO) will never be able to get credit, or new fees will be invented to make up the lost revenue. This will reduce buying power (maybe a good thing for a segment of the population) and put the economy in a tailspin. This will not end well, not even getting into the Post Office portion of this proposal.

I think you've summed up the great fear behind this well. However, this isn't unprecedented. This is a return to normal in fact--coming back to usury laws.

I don't support the proposal as put forward but I do support the intent.

I am also a major proponent of using the Post Office to give access to banking to millions of America's poorest people. Access to banking keeps millions of Americans impoverished and it too is indefensible.

(05-10-2019 10:42 AM)ECUGrad07 Wrote:  

(05-10-2019 10:20 AM)Kronke Wrote:  

(05-10-2019 08:44 AM)ECUGrad07 Wrote:  

(05-10-2019 08:35 AM)HeartOfDixie Wrote:  

(05-10-2019 08:30 AM)ECUGrad07 Wrote:  This is just more proof that the Democrats are anti-personal responsibility.

Get on that gub'ment teet and stay there.

...what?

You do know laws like this where on the books for most of America's history.

I think the less the government controls, the better.

You don't HAVE to sign up for a credit card with a 29% APR. You just don't.

Now, payday loans? That is another story.

How is that another story? Payday loans are bad, but 29% credit cards aren't? Care to quantify? Where is the line where the government should get involved?

These charlie kirk/ben shapiro conservatives that shill for trillion dollar megacorporations aren't doing any favors for the right. People are annoyed with the alt-left, but they are increasingly becoming annoyed with these muh free market/muh private companies/at least it's not the goberment talking points.

The interest rates and fees on payday loans are WAY crazier than some 29% credit card.

Western Sky PayDay Loan

$5,000 Loan
84 monthly payments of $486.58.

$40,872.72 to pay off a $5,000 loan.

"Typical" APR is: 116.73% APR.

It is probably worth pointing out what that same loan would look like with a basic minimum only payment.

That $5,000 would take 375 months to payoff and cost the person over $18,000.

Payday loans aren't intended to reach maturity. Credit cards are.

(05-10-2019 01:43 PM)HeartOfDixie Wrote:  Your economic argument makes sense, and I don't think anybody is arguing that point.

The issue is what is a fair number to take from a desperate person and what is the cost to society in the long run?

Unfortunately there IS no single number.... but the answer has to do with what I was talking about....

Finance is math, not magic (I know you know this). In a perfect world with 'perfect' regulation and access, that means that everyone fits on a risk scale... and the higher you are on the scale, the higher your rate.

My issue with the focus on credit cards is that the people taking out credit card debt most often have access and choices. They have numerous cards, banks, alternative lenders, payday loans and pawn shops to choose from. If any of those are usurious, they go elsewhere. The higher you go on the risk scale, the fewer options you have in terms of access and choices. The top end therefore tends to be more competitive, while the bottom is sometimes a captive audience.

Have you ever watched Pawn Stars? It's not easy to go around and get multiple bids on a revolutionary war sword etc. Those guys sometimes start at say $500 and end up at $1000. A 100% valuation change which dramatically impacts the interest rate/security.

It's not as simple as a score though. One of my banks in Laredo would make a home loan to a local family with a low credit score all day long... because they knew that culturally (legal or not), those people lived multiple generations to one home and that they would make sure they all had a roof. People buying investor property or 'hunting land', they required a pound of flesh regardless of the credit score... because those people didn't need to own it.

So the key to me is increasing access and equity, especially at the lower end of the credit spectrum... and I don't remotely see how capping credit card interest rates does anything except REDUCE access

(05-10-2019 01:40 PM)HeartOfDixie Wrote:  

(05-10-2019 10:26 AM)Oman Wrote:  

(05-10-2019 12:34 AM)HeartOfDixie Wrote:  

(05-09-2019 01:59 PM)Oman Wrote:  I would like to know what article of the constitution authorizes congress to set caps on interest rates.

... interstate commerce

That's an easy one.

Don't want to hijack the thread, but that's a broad interpretation of "interstate commerce", and while congress likes very much to regulate and tax whatever the he!! suits them, I would suggest this is a state issue. let the states set a limit if they want, it is not a responsibility expressly given to the Fed... did loans with interest even exist at the time of the framing?

Loans with interest have existed since the beginning of time, and at least since Shylock and his pound of flesh.

Interstate commerce is a massively broad topic that doubtlessly includes this since most credit card companies are extending credit and terms across state lines.

State or Federal, it makes littler difference since either can regulate it within the original and specific powers given to them.

I find this interesting, so i looked it up ( but have not verified this )
Early 18th Century American colonies adopt usury laws, setting the interest cap at 8%.

After 1776 All of the States in the Union adopt a general usury. Most states set the interest limit at 6%.

Early 1900s A move to deregulation causes 11 states to eliminate their usury laws. Nine more states raise the usury cap to 10% or 12%. Banks are not making personal loans. “Salary Lenders” fill the need by “purchasing” a worker’s future wages in exchange for a high fee – equal to a lending rate of 10% – 33%.

1916 A Uniform Small Loan Law allows specially-licensed lenders to charge higher interest rates—up to 36%—in return for adhering to strict standards of lending.

1945-1979 All states adopt special loan laws that cap interest at higher than the general usury rate—at 36%—but cap it nevertheless.

1978 The US Supreme Court decides that national banks may export the state interest rate law of their home state into any state where they do business. In response, South Dakota eliminates its interest rate caps. Several credit card issuing banks move to South Dakota and operate nationally with no interest rate cap.



In short the capping of interest rates and "usury" has been a state to state issue. And yes, it makes a difference whether it comes from the state or from the Feds.

nice discussion.

(05-10-2019 02:01 PM)Hambone10 Wrote:  

(05-10-2019 01:43 PM)HeartOfDixie Wrote:  Your economic argument makes sense, and I don't think anybody is arguing that point.

The issue is what is a fair number to take from a desperate person and what is the cost to society in the long run?

Unfortunately there IS no single number.... but the answer has to do with what I was talking about....

Finance is math, not magic (I know you know this). In a perfect world with 'perfect' regulation and access, that means that everyone fits on a risk scale... and the higher you are on the scale, the higher your rate.

My issue with the focus on credit cards is that the people taking out credit card debt most often have access and choices. They have numerous cards, banks, alternative lenders, payday loans and pawn shops to choose from. If any of those are usurious, they go elsewhere. The higher you go on the risk scale, the fewer options you have in terms of access and choices. The top end therefore tends to be more competitive, while the bottom is sometimes a captive audience.

Have you ever watched Pawn Stars? It's not easy to go around and get multiple bids on a revolutionary war sword etc. Those guys sometimes start at say $500 and end up at $1000. A 100% valuation change which dramatically impacts the interest rate/security.

It's not as simple as a score though. One of my banks in Laredo would make a home loan to a local family with a low credit score all day long... because they knew that culturally (legal or not), those people lived multiple generations to one home and that they would make sure they all had a roof. People buying investor property or 'hunting land', they required a pound of flesh regardless of the credit score... because those people didn't need to own it.

So the key to me is increasing access and equity, especially at the lower end of the credit spectrum... and I don't remotely see how capping credit card interest rates does anything except REDUCE access

I think it is important to bring up the fact that we are really discussing two separate ideas over the spectrum of time from entering into the usurious contract and the inevitable end of it.

You are making a very front heavy argument which is economic and is not something that can really be denied. AOC's concept is also front end heavy. This focus on preventatives is something that I find to be a serious problem in this country.

I, as I have said previously in other threads, support a very reactive approach--a legalist approach. In that, I support the idea of allowing banks to continue to select an interest rate and perform whatever evaluation they wish. However, the risk of wether or not that deal will be enforced should fall on the lender, not the borrower.

Put simply, we don't have to actually pick a number. We don't even have to pick a scale. We need only discuss the backstop to the matter.

(05-10-2019 02:11 PM)Oman Wrote:  

(05-10-2019 01:40 PM)HeartOfDixie Wrote:  

(05-10-2019 10:26 AM)Oman Wrote:  

(05-10-2019 12:34 AM)HeartOfDixie Wrote:  

(05-09-2019 01:59 PM)Oman Wrote:  I would like to know what article of the constitution authorizes congress to set caps on interest rates.

... interstate commerce

That's an easy one.

Don't want to hijack the thread, but that's a broad interpretation of "interstate commerce", and while congress likes very much to regulate and tax whatever the he!! suits them, I would suggest this is a state issue. let the states set a limit if they want, it is not a responsibility expressly given to the Fed... did loans with interest even exist at the time of the framing?

Loans with interest have existed since the beginning of time, and at least since Shylock and his pound of flesh.

Interstate commerce is a massively broad topic that doubtlessly includes this since most credit card companies are extending credit and terms across state lines.

State or Federal, it makes littler difference since either can regulate it within the original and specific powers given to them.

I find this interesting, so i looked it up ( but have not verified this )
Early 18th Century American colonies adopt usury laws, setting the interest cap at 8%.

After 1776 All of the States in the Union adopt a general usury. Most states set the interest limit at 6%.

Early 1900s A move to deregulation causes 11 states to eliminate their usury laws. Nine more states raise the usury cap to 10% or 12%. Banks are not making personal loans. “Salary Lenders” fill the need by “purchasing” a worker’s future wages in exchange for a high fee – equal to a lending rate of 10% – 33%.

1916 A Uniform Small Loan Law allows specially-licensed lenders to charge higher interest rates—up to 36%—in return for adhering to strict standards of lending.

1945-1979 All states adopt special loan laws that cap interest at higher than the general usury rate—at 36%—but cap it nevertheless.

1978 The US Supreme Court decides that national banks may export the state interest rate law of their home state into any state where they do business. In response, South Dakota eliminates its interest rate caps. Several credit card issuing banks move to South Dakota and operate nationally with no interest rate cap.



In short the capping of interest rates and "usury" has been a state to state issue. And yes, it makes a difference whether it comes from the state or from the Feds.

nice discussion.

The Federal Government has never had a usury, per se, law on the books.

The sates most certainly have. However, you pointed out the trick in the final part of your post.

The states may apply their laws only to intrastate commerce. It would require an act of congress to to make them enforceable for the overwhelming majority of borrowers.

(05-10-2019 01:52 PM)HeartOfDixie Wrote:  I am also a major proponent of using the Post Office to give access to banking to millions of America's poorest people. Access to banking keeps millions of Americans impoverished and it too is indefensible.

Oh, I'm not.
Access, absolutely. Post Office, no. I'd do a grocery store or even a 7-11 before the Post Office.

Post Offices used to be in the center of town, now they're not. They're sometimes not convenient at all... their window hours suck.

(05-09-2019 12:31 PM)copycat Wrote:  

(05-09-2019 12:26 PM)solohawks Wrote:  If this happens then the credit card companies will get accused of being racist and discriminatory due to massive changes in lending practices

Or they'll just give everyone at 15% credit rate... good credit or bad. See that's not discriminatory!

This effectively limits the profit a company can make and the free choice of a consumer to chose to accept a high interest rate, under the guise of "helping people"

Ok... if they want to do that... I cant wait for AOC and Bernie to push through Limits on the cost of coffee. I know tons of people that would like to get a Starbucks coffee for the same price as McDonalds coffee.
Starbucks doesn't need to earn so much money, they need to be fair and help people who have less money to spend.

And hey... while we're at it... why don't we limit the price of Apple products so that everyone can buy them. Who cares if the company apple loses money... its whats fair right?

Everyone should be able to afford a Starbucks latte while they type away on their Macbook. That's just fair.

Incoming screams from the elitist left in 3... 2.... 1...

(05-12-2019 01:00 PM)q5sys Wrote:  

(05-09-2019 12:31 PM)copycat Wrote:  

(05-09-2019 12:26 PM)solohawks Wrote:  If this happens then the credit card companies will get accused of being racist and discriminatory due to massive changes in lending practices

Or they'll just give everyone at 15% credit rate... good credit or bad. See that's not discriminatory!

This effectively limits the profit a company can make and the free choice of a consumer to chose to accept a high interest rate, under the guise of "helping people"

Ok... if they want to do that... I cant wait for AOC and Bernie to push through Limits on the cost of coffee. I know tons of people that would like to get a Starbucks coffee for the same price as McDonalds coffee.
Starbucks doesn't need to earn so much money, they need to be fair and help people who have less money to spend.

And hey... while we're at it... why don't we limit the price of Apple products so that everyone can buy them. Who cares if the company apple loses money... its whats fair right?

Everyone should be able to afford a Starbucks latte while they type away on their Macbook. That's just fair.

Incoming screams from the elitist left in 3... 2.... 1...

while I understand that gist, there is a difference between fair business practice vs. 'rape and pillage'...

what I see happening if implemented would be the poor wouldn't be able to secure credit when in a pinch...

therefore, it would disable the ones they're trying to help...

any way you slice it, it's expensive to be poor....

(05-12-2019 01:11 PM)stinkfist Wrote:  while I understand that gist, there is a difference between fair business practice vs. 'rape and pillage'...

what I see happening if implemented would be the poor wouldn't be able to secure credit when in a pinch...

therefore, it would disable the ones they're trying to help...

any way you slice it, it's expensive to be poor....

I think thats the point. The Elitist Left want the poor to be poor. Look at Major Metro areas... all Dem strongholds... all poor as hell. The Dems want power, and they get power by 'fighting for the poor'. But really... they NEED the poor to stay in power. They don't want to help the poor... because then the poor wouldn't need them (the dems) anymore.

(05-12-2019 01:42 PM)q5sys Wrote:  

(05-12-2019 01:11 PM)stinkfist Wrote:  while I understand that gist, there is a difference between fair business practice vs. 'rape and pillage'...

what I see happening if implemented would be the poor wouldn't be able to secure credit when in a pinch...

therefore, it would disable the ones they're trying to help...

any way you slice it, it's expensive to be poor....

I think thats the point. The Elitist Left want the poor to be poor. Look at Major Metro areas... all Dem strongholds... all poor as hell. The Dems want power, and they get power by 'fighting for the poor'. But really... they NEED the poor to stay in power. They don't want to help the poor... because then the poor wouldn't need them (the dems) anymore.

XACLY!

and I do love me some Charles! he understands how they 'gin' the game...

(05-12-2019 01:42 PM)q5sys Wrote:  

(05-12-2019 01:11 PM)stinkfist Wrote:  while I understand that gist, there is a difference between fair business practice vs. 'rape and pillage'...
what I see happening if implemented would be the poor wouldn't be able to secure credit when in a pinch...
therefore, it would disable the ones they're trying to help...
any way you slice it, it's expensive to be poor....

I think thats the point. The Elitist Left want the poor to be poor. Look at Major Metro areas... all Dem strongholds... all poor as hell. The Dems want power, and they get power by 'fighting for the poor'. But really... they NEED the poor to stay in power. They don't want to help the poor... because then the poor wouldn't need them (the dems) anymore.

"Keep 'em dumb, keep 'em poor, keep 'em dependent on handouts, and you'll keep 'em voting democrat." Because if the poor weren't poor, they might <<gasp>> vote republican.

(05-12-2019 12:25 PM)Kronke Wrote:  

I agree with Carlson(and these 2 nutjobs) on this issue and have no problem capping these predatory interest rates at a reasonable percentage. Id cap it around 10% above prime. As Carlson pointed out it is sad that the GOP did not already do this a couple of decades ago when they had the bill in the Senate. Bernie and AOC have brought up an issue that honestly makes the GOP look bad...and rightly so.

(05-09-2019 01:43 PM)Kronke Wrote:  I do agree with her on one thing, that the rates are high and don't seem to have any wiggle room for people even with excellent credit.

My scores are ~780. I've since paid it off, but like most of us have done from time to time, I was in the habit of racking up debt, and not paying it off in full, and ran up some balances.

Anyway, I called Discover once and asked them about lowering my rate, referencing my great credit and flawless payment history. At first, they acted like I was crazy. Then, they told me to hold while they talked with whoever, and came back and offered to drop it from like 21.99% to 21.75%. I don't remember what exactly the rates were, but the decrease was a quarter of 1 percent. It was insulting.

I cancelled the card.

I don't know what you're talking about with this sentence.

Unless you're literally starving, you'd have to be a complete shortsighted fool to not pay off your credit card balance every month. Everyone from my parents to my grade school math teacher to my high school accounting teacher told me that.