|
Source: (consider it)
|
Thread: If you can't ban them, beat them
|
|
|
goperryrevs
Shipmtae
# 13504
|
Posted
I think it's great.
Credit unions are a great, ethical, community-based source of saving and financial support, especially for people who can't get credit with the banks.
Pay-day loan companies are totally immoral. Charging any interest has been viewed as ethically wrong by the Church for the vast majority of its history. Even if we accept that it's acceptable in today's society, the interest rates that these companies charge should be illegal IMO, and are not much better than loan sharks.
--------------------
"Keep your eye on the donut, not on the hole." - David Lynch
Posts: 2098 | From: Midlands | Registered: Mar 2008
| IP: Logged
|
|
Albertus
Shipmate
# 13356
|
Posted
Agreed. Just the sort of thing that the Church should be looking to do, in the tradition of the monte di pieta. Announcement may be a bit hubristic but it's good fighting talk.
Posts: 6498 | From: Y Sowth | Registered: Jan 2008
| IP: Logged
|
|
Adeodatus
Shipmate
# 4992
|
Posted
Also agreed. In fact I think it's one of the best things I've heard out of the CofE for years.
Obviously, there are problems. Credit unions have limitations, and it may be that the volunteers who'll run them are least available in the places they're most needed. But even if this never got further than an aspiration, it's brilliant. It's long past time the Church took a stand against usury.
--------------------
"What is broken, repair with gold."
Posts: 9779 | From: Manchester | Registered: Sep 2003
| IP: Logged
|
|
Pomona
Shipmate
# 17175
|
Posted
Fantastic news, and I didn't expect such a brave move from ++Welby. Well done Canterbury!
--------------------
Consider the work of God: Who is able to straighten what he has bent? [Ecclesiastes 7:13]
Posts: 5319 | From: UK | Registered: Jun 2012
| IP: Logged
|
|
Gill H
Shipmate
# 68
|
Posted
Great news. There are lots of church-run credit unions already, and also organisations like CAP (Christians Against Poverty) who give free debt counselling and help people out of debt. Our church is a CAP centre and the difference this work makes in people's lives is inspiring.
--------------------
*sigh* We can’t all be Alan Cresswell.
- Lyda Rose
Posts: 9313 | From: London | Registered: May 2001
| IP: Logged
|
|
Raptor Eye
Shipmate
# 16649
|
Posted
I like the proposal, but with reservations. A church should be a house of prayer imv, & not a place for money-lenders. Church halls, no problem, as long as an eye is kept on those taking advantage of the generosity of the congregations by using their facilities, to ensure that they are genuine.
--------------------
Be still, and know that I am God! Psalm 46.10
Posts: 4359 | From: The United Kingdom | Registered: Sep 2011
| IP: Logged
|
|
Erroneous Monk
Shipmate
# 10858
|
Posted
I am supportive because I think that either it will succeed, or it will demonstrate why the payday loan companies are not already competing on price themselves and forcing rates down.
Of course, if it does succeed (ie if payday lender interest rates are what they are because they are villainous profiteers rather than because in a high risk industry they need a margin of safety on their rate of return in order to actually get the capital to lend) the next question will be what other non-competitive industries could the CoE break into?
--------------------
And I shot a man in Tesco, just to watch him die.
Posts: 2950 | From: I cannot tell you, for you are not a friar | Registered: Jan 2006
| IP: Logged
|
|
Mere Nick
Shipmate
# 11827
|
Posted
quote:
Originally posted by goperryrevs:
Charging any interest has been viewed as ethically wrong by the Church for the vast majority of its history. Even if we accept that it's acceptable in today's society, the interest rates that these companies charge should be illegal IMO, and are not much better than loan sharks.
Matthew 25:26-27 from the parable of the talents
26 “His master replied, ‘You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? 27 Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.
I bet even Michael Corleone wouldn't charge the rates by this company that advertises here, though.
--------------------
"Well that's it, boys. I've been redeemed. The preacher's done warshed away all my sins and transgressions. It's the straight and narrow from here on out, and heaven everlasting's my reward."
Delmar O'Donnell
Posts: 2797 | From: West Carolina | Registered: Sep 2006
| IP: Logged
|
|
Mere Nick
Shipmate
# 11827
|
Posted
quote:
Originally posted by Anglican't:
What do you make of the Archbishop of Canterbury's proposal to create credit unions to run the likes of Wonga out of business? I think it shows a bit of gumption.
"Wonga has said it charges about 1% a day on its consumer loans, which are short-term, and for small amounts."
Dude . . .
--------------------
"Well that's it, boys. I've been redeemed. The preacher's done warshed away all my sins and transgressions. It's the straight and narrow from here on out, and heaven everlasting's my reward."
Delmar O'Donnell
Posts: 2797 | From: West Carolina | Registered: Sep 2006
| IP: Logged
|
|
chris stiles
Shipmate
# 12641
|
Posted
Credit Unions rely on a certain critical mass before they are self sustaining - so I hope the CofE's plans will include co-operating with existing Credit Unions where possible rather than blindly setting up their own.
I hope this refers to new initiatives, rather than talking up existing initiatives that have already been launched.
I'd also hope for a both/and approach - someone needs to continue to speak against the pay day lenders - especially since they've managed regulatory capture by funding the party of government.
Posts: 4035 | From: Berkshire | Registered: May 2007
| IP: Logged
|
|
Curiosity killed ...
Ship's Mug
# 11770
|
Posted
It sounds a wonderful idea, but I have seen this attempted and not work brilliantly.
The local church here was where the (County Council) Credit Union was set up - it must have been 6 or 7 years ago, with volunteer support from the church. It is no longer in the church because it didn't get a great take up.
Two problems:
- the way this credit union is set up, borrowing is only allowed by someone who has an account - built up by saving;
- secondly, too many people wouldn't cross the church threshold.
It is still running, but now in the library, still run by a number of church volunteers. I'm not sure how great the take up is now and how well it is managing to compete against loan companies who will lend without an account.
--------------------
Mugs - Keep the Ship afloat
Posts: 13794 | From: outiside the outer ring road | Registered: Aug 2006
| IP: Logged
|
|
Adeodatus
Shipmate
# 4992
|
Posted
quote:
Originally posted by Mere Nick:
"Wonga has said it charges about 1% a day on its consumer loans, which are short-term, and for small amounts."
Dude . . .
They're meant to be short-term. They aren't always. And if my maths is right, 1% per day is still 34% in a typical month. If you need to borrow Ł100 to cover your bills this month, are you likely to be able to pay your bills and another Ł134 to the loan company next month?
--------------------
"What is broken, repair with gold."
Posts: 9779 | From: Manchester | Registered: Sep 2003
| IP: Logged
|
|
Captain Chrism
Shipmate
# 11393
|
Posted
Southwell diocese seems to be ahead of the game.
Southwell Diocese
--------------------
Because we are not an organisation, let alone a business, or even an institution, but in reality the people of God gathered by the Holy Spirit to walk together in a way that leads to the greater glory of God... Justin Welby
Posts: 72 | From: Sherwood Forest, England | Registered: May 2006
| IP: Logged
|
|
The Midge
Shipmate
# 2398
|
Posted
Perhaps there will be a Canterbury & York Building Society on day.
Good idea but if ministers and staff need payday loans to get by then funding such an enterprise might be a but challenging.
--------------------
Some days you are the fly.
On other days you are the windscreen.
Posts: 1085 | Registered: Feb 2002
| IP: Logged
|
|
Erroneous Monk
Shipmate
# 10858
|
Posted
quote:
Originally posted by Adeodatus:
quote:
Originally posted by Mere Nick:
"Wonga has said it charges about 1% a day on its consumer loans, which are short-term, and for small amounts."
Dude . . .
They're meant to be short-term. They aren't always. And if my maths is right, 1% per day is still 34% in a typical month. If you need to borrow Ł100 to cover your bills this month, are you likely to be able to pay your bills and another Ł134 to the loan company next month?
Of course you'd easily rack up at least Ł34, probably much more, if you went over your overdraft limit on your current account with a high street bank. Which is why payday lenders have lots of customers who do have other banking arrangements.
--------------------
And I shot a man in Tesco, just to watch him die.
Posts: 2950 | From: I cannot tell you, for you are not a friar | Registered: Jan 2006
| IP: Logged
|
|
Erroneous Monk
Shipmate
# 10858
|
Posted
I should have added to that that now the government owns a couple of high street banks, why haven't we seen the exhorbitant bank short term lending rate, disguised as fees and charges, come down?
--------------------
And I shot a man in Tesco, just to watch him die.
Posts: 2950 | From: I cannot tell you, for you are not a friar | Registered: Jan 2006
| IP: Logged
|
|
The Midge
Shipmate
# 2398
|
Posted
quote:
Originally posted by Erroneous Monk:
I should have added to that that now the government owns a couple of high street banks, why haven't we seen the exhorbitant bank short term lending rate, disguised as fees and charges, come down?
Because they want to reprivatize them and get all the money that was invested in them back again.
--------------------
Some days you are the fly.
On other days you are the windscreen.
Posts: 1085 | Registered: Feb 2002
| IP: Logged
|
|
Erroneous Monk
Shipmate
# 10858
|
Posted
Here, for example, are RBS's overdraft terms.
--------------------
And I shot a man in Tesco, just to watch him die.
Posts: 2950 | From: I cannot tell you, for you are not a friar | Registered: Jan 2006
| IP: Logged
|
|
Erroneous Monk
Shipmate
# 10858
|
Posted
quote:
Originally posted by The Midge:
quote:
Originally posted by Erroneous Monk:
I should have added to that that now the government owns a couple of high street banks, why haven't we seen the exhorbitant bank short term lending rate, disguised as fees and charges, come down?
Because they want to reprivatize them and get all the money that was invested in them back again.
But it seems to me that the particular opprobrium reserved for Wonga ignores the effective rate charged by high street banks (including government owned ones) for lending sometimes incredibly small amounts - Ł6?!
--------------------
And I shot a man in Tesco, just to watch him die.
Posts: 2950 | From: I cannot tell you, for you are not a friar | Registered: Jan 2006
| IP: Logged
|
|
goperryrevs
Shipmtae
# 13504
|
Posted
quote:
Originally posted by Mere Nick:
quote:
Originally posted by goperryrevs:
Charging any interest has been viewed as ethically wrong by the Church for the vast majority of its history. Even if we accept that it's acceptable in today's society, the interest rates that these companies charge should be illegal IMO, and are not much better than loan sharks.
Matthew 25:26-27 from the parable of the talents
26 “His master replied, ‘You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? 27 Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.
I'm very aware of that passage, and I'm sure we could play a game of proof text. But my point was that, however you interpret the bible, for the majority of its history, the church interpreted it & taught that any usury was wrong. So said three ecumenical councils, and AFAIK the church fathers were unanimous on it. That point still stands, whether or not we choose to disagree with them now, which IMO we're totally entitled to do. I just happen to agree with them.
--------------------
"Keep your eye on the donut, not on the hole." - David Lynch
Posts: 2098 | From: Midlands | Registered: Mar 2008
| IP: Logged
|
|
Mere Nick
Shipmate
# 11827
|
Posted
quote:
Originally posted by Adeodatus:
quote:
Originally posted by Mere Nick:
"Wonga has said it charges about 1% a day on its consumer loans, which are short-term, and for small amounts."
Dude . . .
They're meant to be short-term. They aren't always. And if my maths is right, 1% per day is still 34% in a typical month. If you need to borrow Ł100 to cover your bills this month, are you likely to be able to pay your bills and another Ł134 to the loan company next month?
It seems it would probably be tough. I can understand why someone would charge this much because of the costs involved in having an office, paying staff, taking applications, collecting money, and the like.
That's got to be a tough and lonely situation for the borrower. Most folks can talk to family, friends, their congregation, etc.
--------------------
"Well that's it, boys. I've been redeemed. The preacher's done warshed away all my sins and transgressions. It's the straight and narrow from here on out, and heaven everlasting's my reward."
Delmar O'Donnell
Posts: 2797 | From: West Carolina | Registered: Sep 2006
| IP: Logged
|
|
Leorning Cniht
Shipmate
# 17564
|
Posted
quote:
Originally posted by Adeodatus:
They're meant to be short-term. They aren't always. And if my maths is right, 1% per day is still 34% in a typical month. If you need to borrow Ł100 to cover your bills this month, are you likely to be able to pay your bills and another Ł134 to the loan company next month?
If you're borrowing money to meet your regular living expenses, you have a problem whatever the interest rate, and whoever the lender.
To me, Wonga makes sense, and really isn't expensive, for short term, unexpected spending - things like your car breaking, you have to find an extra hundred quid to have it fixed, today, and don't get paid till next week.
The "conventionally banked" would just put it on a credit card, and pay it off next month.
Credit unions are good things, and certainly have their place (and are a far better option for loans over several months or more), and they are a good way of providing banking to the unbanked.
But they're not a panacea, and they don't occupy quite the same niche as the payday lenders.
Posts: 5026 | From: USA | Registered: Feb 2013
| IP: Logged
|
|
Martin60
Shipmate
# 368
|
Posted
Banning them simply empowers criminals (as with gambling, drugs and prostitution) and there is no way to beat them, compete with them. The flat alternative is what we have: a free market.
Christianity needs to be above that.
Holding all things in common.
No chance.
Absolutely no chance.
--------------------
Love wins
Posts: 17586 | From: Never Dobunni after all. Corieltauvi after all. Just moved to the capital. | Registered: Jun 2001
| IP: Logged
|
|
Horseman Bree
Shipmate
# 5290
|
Posted
Just to get out of the sterile (and circular) argument from proof-texts, try what Slacktivist had to say on the topic a few years ago. (You can follow his links for parts 2 and 3.)
Properly run, a credit union set up through the church should be acceptable, even if it actually operates off the church property.
And it may be a good opportunity for outreach and assistance...again, if done well. If it is just seen as an excuse for bible-thumping, it will serve no purpose at all.
--------------------
It's Not That Simple
Posts: 5372 | From: more herring choker than bluenose | Registered: Dec 2003
| IP: Logged
|
|
deano
princess
# 12063
|
Posted
It boils down to this: do you want poor people borrowing money...
1) At high rates of interest but in a regulated market.
2) At high rates of interest but in an unregulated,. back street, loan-shark market.
Are the rates high in pay-day load companies? Yes, but at least they wont come round and beat up your kids for not paying, and you still having the debt afterwards.
My question is, where is the competition? What is stopping companies entering the market charging lower rates, and then lower, and then lower?
Competing on price results in a race to the bottom, so why isn't that happening?
--------------------
"The moral high ground is slowly being bombed to oblivion. " - Supermatelot
Posts: 2118 | From: Chesterfield | Registered: Nov 2006
| IP: Logged
|
|
Sioni Sais
Shipmate
# 5713
|
Posted
quote:
Originally posted by deano:
It boils down to this: do you want poor people borrowing money...
1) At high rates of interest but in a regulated market.
2) At high rates of interest but in an unregulated,. back street, loan-shark market.
Are the rates high in pay-day load companies? Yes, but at least they wont come round and beat up your kids for not paying, and you still having the debt afterwards.
My question is, where is the competition? What is stopping companies entering the market charging lower rates, and then lower, and then lower?
Competing on price results in a race to the bottom, so why isn't that happening?
Duh, because banks are more interested in making a profit for their shareholders than in supplying unsecured credit to sub-prime borrowers. They pick and choose their customers.
--------------------
"He isn't Doctor Who, he's The Doctor"
(Paul Sinha, BBC)
Posts: 24276 | From: Newport, Wales | Registered: Apr 2004
| IP: Logged
|
|
Jay-Emm
Shipmate
# 11411
|
Posted
It was nice to read two pages of comments on the BBC without the typical nasty ones you often find (of course in some cases the topic invites it).
So although my first thought this morning was that it was a bit cringe-worthy. It seems to have had the response a right action should (there's obviously some cases when being a voice in the wilderness is good, but...). Ohh it's changed now (Vince Cable supports it -verbally)
I liked the slackatist blog post linked. The phrase beginning "My more conservative evangelical..." is disappointingly accurate at times.
Posts: 1643 | Registered: May 2006
| IP: Logged
|
|
Avila
Shipmate
# 15541
|
Posted
quote:
Originally posted by Raptor Eye:
I like the proposal, but with reservations. A church should be a house of prayer imv, & not a place for money-lenders. Church halls, no problem, as long as an eye is kept on those taking advantage of the generosity of the congregations by using their facilities, to ensure that they are genuine.
For hundreds of years when the church was the only community building it was the place of markets, farmers doing deals and all sorts of other things.
If tempted to quote the cleansing of the temple I see the issue there is that the stalls etc were in the only place that gentiles were allowed to pray - ie they had nowhere peaceful to go.
Generally churches using their buildings for other purposes still offer open access to areas where anyone can go and prayer. Maybe it is those of us with locked doors Mon-sat that would provoke Jesus' anger more than the traders these days for denying people a place to pray.
--------------------
http://aweebleswonderings.blogspot.com/
Posts: 1305 | From: west midlands | Registered: Mar 2010
| IP: Logged
|
|
LeRoc
Famous Dutch pirate
# 3216
|
Posted
quote:
Avila: For hundreds of years when the church was the only community building it was the place of markets, farmers doing deals and all sorts of other things.
In many villages in inland Brazil it still is. They might not be doing their deals inside the church building (too hot) but definitely on the church grounds.
--------------------
I know why God made the rhinoceros, it's because He couldn't see the rhinoceros, so He made the rhinoceros to be able to see it. (Clarice Lispector)
Posts: 9474 | From: Brazil / Africa | Registered: Aug 2002
| IP: Logged
|
|
SvitlanaV2
Shipmate
# 16967
|
Posted
quote:
Originally posted by Curiosity killed ...:
It sounds a wonderful idea, but I have seen this attempted and not work brilliantly.
The local church here was where the (County Council) Credit Union was set up - it must have been 6 or 7 years ago, with volunteer support from the church. It is no longer in the church because it didn't get a great take up.
Two problems:
- the way this credit union is set up, borrowing is only allowed by someone who has an account - built up by saving;
- secondly, too many people wouldn't cross the church threshold.
It is still running, but now in the library.
Re the second point, when I heard about this on the radio today I did wonder about the likelihood of getting non-church people over the threshold to use the service. I know some churches that are doing well as community hubs for certain groups of people, but it takes time to build trust. I don't think it would be wise to start a credit union in a church where there's little or no recent history of community footfall, so to speak. What this means, though, is that only churches that already have their act together community-wise would be likely to benefit from this opportunity to serve.
Posts: 6668 | From: UK | Registered: Feb 2012
| IP: Logged
|
|
Leorning Cniht
Shipmate
# 17564
|
Posted
quote:
Originally posted by Sioni Sais:
Duh, because banks are more interested in making a profit for their shareholders than in supplying unsecured credit to sub-prime borrowers. They pick and choose their customers.
The economics of credit unions aren't so terribly different. Yes, they don't need to make a profit, and don't have shareholders to satisfy, but the margins on commercial banking are actually not all that high - the big banks make so much money mostly because they have so much volume.
While a credit union doesn't need that profit, the same basic economic calculus applies - it has to expect to cover its costs, on average, on the loans it makes or it rapidly becomes an ex-credit union.
Posts: 5026 | From: USA | Registered: Feb 2013
| IP: Logged
|
|
chris stiles
Shipmate
# 12641
|
Posted
quote:
Originally posted by deano:
It boils down to this: do you want poor people borrowing money...
Or you can take a good long look at our credit culture, and wonder if it has - perhaps - gone a little too far, and perhaps whether one ought to structure society and financial incentives differently.
To a large extent these companies are around because many people don't earn a living wage that can cope with emergencies.
Posts: 4035 | From: Berkshire | Registered: May 2007
| IP: Logged
|
|
Pyx_e
Quixotic Tilter
# 57
|
Posted
I raised a weary head, gave a cheer from the depth of my slighted soul and my hand fell back to the plough. It’s ok for him who eats the finest bread, I spend all day looking at the horses arse. God’s creatures befouled in debt are but one part of the rich tapestry. By the time Justin’s dove reaches my lowly ears the cunning men will have stripped it of its vitality and so bound it in red tape it will resemble nothing more than a freshly shot pigeon, looking at me with its cold ashamed eye as we share the embarrassing thought of what might have been.
It’s been a hard day.
Fly Safe, Pyx_e
--------------------
It is better to be Kind than right.
Posts: 9778 | From: The Dark Tower | Registered: May 2001
| IP: Logged
|
|
Avila
Shipmate
# 15541
|
Posted
This is where the different types of community vary. Here in the rural area - small communities and with many of the primary schools CofE linked - people are much more familiar with going into the church for a variety of things from the local choir concert to the school leavers' service.
I think that supporting existing groups is the way to go, and offering another collection point in a neighbouring community as an extension can be of real benefit, but if the village hall, or town library is at better place then go with that.
--------------------
http://aweebleswonderings.blogspot.com/
Posts: 1305 | From: west midlands | Registered: Mar 2010
| IP: Logged
|
|
moonlitdoor
Shipmate
# 11707
|
Posted
quote:
originally posted by Sioni Sais
Duh, because banks are more interested in making a profit for their shareholders than in supplying unsecured credit to sub-prime borrowers. They pick and choose their customers.
You seem to be missing deano's point here. It would seem that payday loan rates are extremely high and that it should be possible to make a profit charging lower rates. One would expect someone to be attempting to do that and gain market share by undercutting the other lenders.
Retail banking isn't a very competitive market, cost of entry is very high, not that easy to get a licence, extensive regulation. Pay day lending by contrast is quite easy to get into in the UK, cost of entry is low, so there are dozens of companies operating, which means it ought to be quite competitive.
I think it's quite good if the church can help credit unions but I struggle to see how credit unions will replace pay day lenders, as credit unions normally work for people who are sometimes savers and sometimes borrowers, whereas pay day lenders' customers are more likely to be people who are nearly always borrowers.
--------------------
We've evolved to being strange monkeys, but in the next life he'll help us be something more worthwhile - Gwai
Posts: 2210 | From: london | Registered: Aug 2006
| IP: Logged
|
|
|
|
Sioni Sais
Shipmate
# 5713
|
Posted
quote:
Originally posted by moonlitdoor:
quote:
originally posted by Sioni Sais
Duh, because banks are more interested in making a profit for their shareholders than in supplying unsecured credit to sub-prime borrowers. They pick and choose their customers.
You seem to be missing deano's point here. It would seem that payday loan rates are extremely high and that it should be possible to make a profit charging lower rates. One would expect someone to be attempting to do that and gain market share by undercutting the other lenders.
That would happen in a free market, but the market for banking, as for everything else, is distorted by financial muscle which enables those who have economic power to influence government policy.
quote:
Retail banking isn't a very competitive market, cost of entry is very high, not that easy to get a licence, extensive regulation. Pay day lending by contrast is quite easy to get into in the UK, cost of entry is low, so there are dozens of companies operating, which means it ought to be quite competitive.
As you say, retail banking is highly regulated and difficult to enter. Do you think for a moment that the existing retail bankers actually want competition??
quote:
I think it's quite good if the church can help credit unions but I struggle to see how credit unions will replace pay day lenders, as credit unions normally work for people who are sometimes savers and sometimes borrowers, whereas pay day lenders' customers are more likely to be people who are nearly always borrowers.
It looks like the government is already acting to improve the economics of credit unions, althout 3% per month still looks like usury to me. Credit unions provide a substantial proportion of personal banking in the USA and, with the major banks hamstrung by their concentration on speculative activities there is room in the market, but I don't think the big retail bankers want anyone else in there, and their vested interests are far more powerful than those of the pay-day lenders.
--------------------
"He isn't Doctor Who, he's The Doctor"
(Paul Sinha, BBC)
Posts: 24276 | From: Newport, Wales | Registered: Apr 2004
| IP: Logged
|
|
|
|
daronmedway
Shipmate
# 3012
|
Posted
Maybe Welby should sort out this hypocritical little gem of policy before he does any more sabre rattling. Full article here.
quote:
The Church's Ethical Investment Advisory Group "recommends against investment" in companies which make more than 3% of their income from pornography, 10% from military products and services, or 25% from other industries such as gambling, alcohol and high interest rate lenders.
[ 26. July 2013, 09:24: Message edited by: daronmedway ]
Posts: 6976 | From: Southampton | Registered: Jul 2002
| IP: Logged
|
|
Marvin the Martian
Interplanetary
# 4360
|
Posted
quote:
Originally posted by chris stiles:
Or you can take a good long look at our credit culture, and wonder if it has - perhaps - gone a little too far, and perhaps whether one ought to structure society and financial incentives differently.
Suggest a system that would work better, then.
--------------------
Hail Gallaxhar
Posts: 30100 | From: Adrift on a sea of surreality | Registered: Apr 2003
| IP: Logged
|
|
Erroneous Monk
Shipmate
# 10858
|
Posted
quote:
Originally posted by Sioni Sais:
As you say, retail banking is highly regulated and difficult to enter. Do you think for a moment that the existing retail bankers actually want competition??
I'm not sure you're getting moonlitdoor's point which is that payday lenders *aren't* regulated like banks.
To set up a payday loan company, you need to be able to get someone to lend money to you, which you can lend on to the sub-sub-prime market. You need to charge a rate of interest that covers your costs, and the very high rate of interest you are being charged by the entity loaning to you (very high, because your credit risk reflects the credit risk of the people you lend to).
On the radio this morning, some bloke was suggesting that the CoE could finance its ethical payday loans out of the CoE pension fund! Now, if you're relying on that fund for your survival in retirement, what rate of interest do you want the fund to charge the credit union to borrow your cash and lend it to sub-sub-prime borrowers? Quite a high one, I think.
So the credit union/payday lender has to lend on at a high rate. The credit union might be able to undercut Wonga because:
- some of its people are volunteers
- it doesn't want to make a profit itself
But given we have a free market, you wouldn't expect a credit union to be able to undercut a payday lender for any other reason
So, as I said above, this exercise will be interesting, if nothing else, because it will show us exactly what part of Wonga's interest rate goes to cover admin and profit, and what part is simply the market cost of lending to the sub-sub-prime market.
--------------------
And I shot a man in Tesco, just to watch him die.
Posts: 2950 | From: I cannot tell you, for you are not a friar | Registered: Jan 2006
| IP: Logged
|
|
QLib
Bad Example
# 43
|
Posted
When I first heard it, I thought it was a great initiative, but I wonder if it will work. I suspect that one of the attractions of payday loans is that not many questions are asked, whereas I guess Credit Unions have to ask questions. What the Church-backed initiative may end up doing, is cream off the top end of the market (those most sensible, responsible and likely to be able to pay back) and leave the feckless, helpless and hopeless still at the mercy of the sharks. I fear it's a sticking plaster on a wound.
--------------------
Tradition is the handing down of the flame, not the worship of the ashes Gustav Mahler.
Posts: 8913 | From: Page 28 | Registered: May 2001
| IP: Logged
|
|
Sioni Sais
Shipmate
# 5713
|
Posted
Erroneous Monk, where do you, or anyone else, get the idea we have a free market? The market is subject to nothing but The Golden Rule, namely those who have the gold, make the rules.
Concentrated economic power, whether selling (eg, credit providers) or buying (eg, supermarket chains) will distort any market, and there is hardly a market that doesn't have a major player. In the 1970's some trade unions did it and in the renaissance, before modern capitalism, the guilds and chartered companies did so too.
I suppose therefore it has a long and honourable history. There is probably scripture, for and against the concentration of wealth.
--------------------
"He isn't Doctor Who, he's The Doctor"
(Paul Sinha, BBC)
Posts: 24276 | From: Newport, Wales | Registered: Apr 2004
| IP: Logged
|
|
Marvin the Martian
Interplanetary
# 4360
|
Posted
quote:
Originally posted by QLib:
What the Church-backed initiative may end up doing, is cream off the top end of the market (those most sensible, responsible and likely to be able to pay back) and leave the feckless, helpless and hopeless still at the mercy of the sharks. I fear it's a sticking plaster on a wound.
Either that or they'll end up bankrupting the church by losing money on people who never repay their debt and not generating enough interest from the ones who do repay to cover those losses.
--------------------
Hail Gallaxhar
Posts: 30100 | From: Adrift on a sea of surreality | Registered: Apr 2003
| IP: Logged
|
|
moonlitdoor
Shipmate
# 11707
|
Posted
Erroneous Monk, do you know whether anyone has tried starting up peer to peer lending in this short term loan market ?
That I think would be a more direct competitior to pay day loan companies than credit unions are. Peer to peer lending would be quite effective in finding the true cost of providing this sort of finance, and also gives an opportunity for those who would like to help provide cheaper credit to put their money where their mouth is.
--------------------
We've evolved to being strange monkeys, but in the next life he'll help us be something more worthwhile - Gwai
Posts: 2210 | From: london | Registered: Aug 2006
| IP: Logged
|
|
Sioni Sais
Shipmate
# 5713
|
Posted
quote:
Originally posted by moonlitdoor:
Erroneous Monk, do you know whether anyone has tried starting up peer to peer lending in this short term loan market ?
That I think would be a more direct competitior to pay day loan companies than credit unions are. Peer to peer lending would be quite effective in finding the true cost of providing this sort of finance, and also gives an opportunity for those who would like to help provide cheaper credit to put their money where their mouth is.
Not quite what you have in mind, but this is a "personal guarantor" scheme.
I've no idea how effective it is or how long-lived it will prove to be. Still doesn't look cheap, but comparable to the proposed credit union limits.
--------------------
"He isn't Doctor Who, he's The Doctor"
(Paul Sinha, BBC)
Posts: 24276 | From: Newport, Wales | Registered: Apr 2004
| IP: Logged
|
|
Erroneous Monk
Shipmate
# 10858
|
Posted
quote:
Originally posted by moonlitdoor:
Erroneous Monk, do you know whether anyone has tried starting up peer to peer lending in this short term loan market ?
That I think would be a more direct competitior to pay day loan companies than credit unions are. Peer to peer lending would be quite effective in finding the true cost of providing this sort of finance, and also gives an opportunity for those who would like to help provide cheaper credit to put their money where their mouth is.
Isn't peer to peer lending in this market just your desperate mate saying "Ah please, go on, buy my [insert time sensitive purchase such as gig tickets, train fare, round of drink] for me - I haven't got the cash now but I'll give it straight back to you as soon as my pay clears"?
And of course, they don't. And then they do the same the next time. And at some point they hit an arbitrary limit you've set and you just say no, no more, and write it all off to experience?
--------------------
And I shot a man in Tesco, just to watch him die.
Posts: 2950 | From: I cannot tell you, for you are not a friar | Registered: Jan 2006
| IP: Logged
|
|
Curiosity killed ...
Ship's Mug
# 11770
|
Posted
Another local initiative works to provide people with deposits for rented accommodation along those lines - acting as a personal guarantor and/or providing the deposit. The charity also checks the flats / houses before and after occupancy and sorts out any minor difficulties to minimise the risk. Again this is voluntarily run by an ecumenical church group. That one has been running for a number of years too.
--------------------
Mugs - Keep the Ship afloat
Posts: 13794 | From: outiside the outer ring road | Registered: Aug 2006
| IP: Logged
|
|
Erroneous Monk
Shipmate
# 10858
|
Posted
quote:
Originally posted by Sioni Sais:
quote:
Originally posted by moonlitdoor:
Erroneous Monk, do you know whether anyone has tried starting up peer to peer lending in this short term loan market ?
That I think would be a more direct competitior to pay day loan companies than credit unions are. Peer to peer lending would be quite effective in finding the true cost of providing this sort of finance, and also gives an opportunity for those who would like to help provide cheaper credit to put their money where their mouth is.
Not quite what you have in mind, but this is a "personal guarantor" scheme.
I've no idea how effective it is or how long-lived it will prove to be. Still doesn't look cheap, but comparable to the proposed credit union limits.
This is quite cool though I'd either want a recourse arrangement with the borrower or it'd have to be an amount I was just prepared to give away and a person I was just prepared to give it to.
There's also Lend With Care though not for UK entrepreneurs.
--------------------
And I shot a man in Tesco, just to watch him die.
Posts: 2950 | From: I cannot tell you, for you are not a friar | Registered: Jan 2006
| IP: Logged
|
|
|
Printer-friendly view
![[Disappointed]](graemlins/disappointed.gif)
![[Big Grin]](biggrin.gif)
