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The FDIC protects depositors, not lenders or borrowers. Ironically, limiting the amount of interest credit card companies (banks) can charge high-risk borrowers will make the FDIC even more necessary as banks will not be able to cover the losses they incur from high-risk borrowers who default and/or have their unpaid balances discharged in bankruptcy.
Wrong. The reason financial institutions don't make these loans, at least in their own names, is that they cannot afford the hit to their reputations. 22% is enough for the financial institutions to cover nonpayment risk.
Wrong. The reason financial institutions don't make these loans, at least in their own names, is that they cannot afford the hit to their reputations. 22% is enough for the financial institutions to cover nonpayment risk.
No, I'm actually correct. The 15% limit on credit card interest isn't enough to cover the losses incurred when high-risk borrowers default and/or have their credit card balances discharged in bankruptcy. See what I mean?
Payday loan and credit card debt are uncollateralized. There is nothing to repossess or foreclose on when the debt balance doesn't get paid. That fact, too, is another reason why payday loan and credit card interest is so high for high-risk borrowers.
Wrong. The reason financial institutions don't make these loans, at least in their own names, is that they cannot afford the hit to their reputations. 22% is enough for the financial institutions to cover nonpayment risk.
Maybe, but what's the moral justification to prevent others from making such loans?
No, I'm actually correct. The 15% limit on credit card interest isn't enough to cover the losses incurred when high-risk borrowers default and/or have their credit card balances discharged in bankruptcy. See what I mean?
Payday loan and credit card debt are uncollateralized. There is nothing to repossess or foreclose on when the debt balance doesn't get paid. That fact, too, is another reason why payday loan and credit card interest is so high for high-risk borrowers.
You are 100% correct.
Sadly, talking some financial sense into the financial illiterate and to those in denial is something that I gave up long time ago.
If nobody is allowed to conduct "predatory lending," where can the poor people borrow money they desperately need? From mafia or drug dealers because they would be the only available then?
Last edited by lifeexplorer; 05-12-2019 at 11:10 AM..
Sadly, talking some financial sense into the financial illiterate and to those in denial is something that I gave up long time ago.
You know... FWIW... My own parents were horrendous money managers, always fighting to keep their head above water, so I didn't learn about managing financial affairs from them. Nor did I learn it in K-12 school. The topic was never even broached/discussed in any classroom. To be honest, it's just common sense. Nothing mysterious or difficult about it. So I'm stumped when so many people simply have NO clue... /smh
What about people’s freedom and rights? Don’t I have the freedom to charge whatever price I like?
Take the payday lending for example. You think it’s predatory. In reality the high interest rates are caused by astronomically high default rate among the poor people or those with high credit risk.
If they can pay back the money, what’s the problem? If they can’t, the lending company would get jack. So shouldn’t the lending companies be protected when the poor people deliberately violate the contract they signed?
Protection from big corporations? Can you give me one example that a big corporation can crush an individual without the help of the government?
Upon what basis do you conclude that "freedom" is moral? Or is your belief simply subjective?
"Can you give me one example that a big corporation can crush an individual without the help of the government?"
Ah, it's time for the goofy libertarians to spout dogma. Yes, the only institution in society that has a monopoly on force is "da government." Say, what would happen in Galt's Gulch, when the state has withered away and lenders want to recoup their losses from the few moochers who somehow snuck in? Would those institutions just ask for the money back and give up when the moochers refused to make good on their debts? How would that work under the libertarian-feudalism, keeping in mind the sacrosanct "nonaggression principle?"
Last edited by chiociolliscalves; 05-12-2019 at 11:20 AM..
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