I saw one of those “in a bind? we can help” commercials last night. The company was called ThinkCash. They boasted how they wanted to help you pay your bills and that they could have money in your checking account tomorrow! (apparently via the First Bank of Delaware.) As the fine print whizzed by, something caught my eye that looked like a mistake. So, I checked out their web site.
“The Annual Percentage Rate (APR) for an example $1250.00 loan is 171.5% with 36 bi-weekly payments of $91.66.”
Wow. I really thought this would be illegal. These days a lot of people are in trouble – especially working middle class folks – and in my view it will get worse before it gets better. Some might optimistically think they are in a temporary bind – I just need a grand or two to stitch these two paychecks together – and go for offers like these, only to find themselves even worse off. The holiday season can fuel an even sadder version of this mentality.
In the past I would have said, “screw them/it, people can make their own decisions, their own deals, negotiate their own terms. Leave the market free to sort this out.” But there are responsible limits. I don’t know if I think government should enforce them or if we should just shame companies into behaving more ethically (if that’s possible) – but I do know that charging a 171.5% interest rate to people who are in the least position to negotiate is cruel, predatory and simply wrong. I am vaguely reminded of a recent Bill Moyers interview with John Bogle. Bogle recently wrote The Soul of Capitalism and worries about the lack of regulation in the hedge fund industry and the financial economy as a whole. I wonder what he’d say about this.
It sure says something about us that we’ve made it much harder for the average Joe to declare bankruptcy, but predatory scumbag lenders remain free to do as they wish.