December 2, 2009

A wee bit more hair of the dog that bit us, please

The government's 40 year campaign to get more mortgages in the hands of the poor and the minority having worked out so well, the FDIC has moved on to new goals:

From the Washington Post:
Blacks, poor lack access to banks

FDIC report finds one-quarter of U.S. households exist largely below radar of financial institutions.

... On Wednesday, Sen. Herb Kohl (D-Wis.) proposed legislation aimed at encouraging banks to compete with payday lenders and provide small, short-term loans to unbanked and underbanked consumers. The legislation would establish a federal fund to guarantee up to 60 percent of those loans. In return, banks must cap the loans at $2,500 and the interest rates at 36 percent, among other requirements.

"As we consider changes to our financial system, we should include reforms that will help increase access to many of those who are left out," Kohl said in a statement.

My published articles are archived at iSteve.com -- Steve Sailer

36 comments:

Anonymous said...

europeasant says;
I do not know old Herb Kohl is, but he sounds senile.

Chris Anderson said...

"Underbanked" = "Maxed Out" It is really that simple.

If you're talking about financial illiteracy, you can start with the likes of Herb Kohl. He really has no idea what it's like to consider getting a payday loan. Why would he know?

Want to get rid of payday lenders? It's actually fairly easy... eliminate or cap bank fees so that an overdraft or late fee doesn't cost anywhere from $29 to $70. With that as an alternative, a payday loan is a rational decision for any maxed-out person trying to balance time and money.

Melykin said...

Was this from the Onion? I sure hope so.

rightsaidfred said...

I guess all social policy from DC must be a ramp to failure.

Anonymous said...

The people currently running this country are bound and determined to piss it down their legs, aren't they?

Stopped Clock said...

36%? Thank God I've never had to take out a bank loan; if 36 percent is considered a "low" interest rate, I'd hate to be in the position of someone being forced to pay back a loan at a "high" rate.

Richard said...

Because those that couldn't qualify for a regular 10% loan in the first place can really afford to pay 36%.

Got it.

Anonymous said...

The best thing the U.S. Government could do for poor people is to mandate a personal finance course in public high schools. How these people continually appear, saying 'I couldn't get by without my bi-weekly $500 payday loan,' without figuring out that if you pull the belt tight for a month or two YOU WILL NEVER NEED ANOTHER SUCH LOAN, is beyond me.

PR

Anonymous said...

Why are Christians in public life, such as Roman Catholics, scrutinized to ensure they don't allow their religious beliefs to influence their policy positions, yet others aren't?

I am sure Herb Kohl is just pursuing 'social justice' as he was taught. But given that there is no constitutional justification for 'social justice' aka theft, why aren't Jews pressured to separate their beliefs from the way they govern?

Anonymous said...

http://en.wikipedia.org/wiki/Herb_Kohl


Just LOOK at the Sailer themes on Herb Kohl's Wikipedia page kids.


He owns the Milwalkee Bucks (sports, check)

He was president of KOHL'S Department Stores for a while (money, check)

He is the second wealthiest member of congress (check).

He went to grad school at Harvard (check)

His religion is listed as .......no, Im not going into that--read the Wiki.


He wants to introduce a bill that will allow banks (and any bankers who he is friends with, and who generously support his campaigns with financial contributions....aw I take that back. Thats stereotyping politicians) to "compete" with mega-SLEAZOID "Payday Lenders" for the sake of fighting discrimination and not robbing the poor blind, while making the REST OF US taxpaying schmucks back the loans up to 60%.


All in the name of social justice fighting economic-racial discrimination against the "underserved" minorities disadvantaged by white scumbags like me.



I know.....You cruel heartless, cynical, unspeakable bastard Miles. How dare you point this out. I'll burn in hell and be made to listen to Barry Manilow records while being forced to watch Rupert Murdoch participate on "Dancing With the Stars", etc. etc.

Glaivester said...

36%? Thank God I've never had to take out a bank loan; if 36 percent is considered a "low" interest rate, I'd hate to be in the position of someone being forced to pay back a loan at a "high" rate.

If that is the annualized rate, you should consider that 36% amounts to approximately 0.7% per week. For a payday loan, that would be equivalent to 1.4% of income (assuming each loan is about 2 weeks).

Anonymous said...

"saying 'I couldn't get by without my bi-weekly $500 payday loan,' without figuring out that if you pull the belt tight for a month or two YOU WILL NEVER NEED ANOTHER SUCH LOAN, is beyond me.

PR"



PR,
My friend these people aren't like you and me. They -have- to have money for their pack (or 2) of cigarettes every day, and a six pack of whatever cheapie booze, and cable TV (heaven forbid they read a library book), and money for frozen instant dinners and drive-thrus, coca-cola, or (heaven forbid) work a second job for one year and get the cards paid off. Delay of gratification is not in their DNA, just as future-time orientation is not either*. But wallowing is, having out-of-wedlock kids are, drama is also usually encoded on one of the 23 chromosomes also, as well as the need for that flatscreen with umpteen channels.


*Dennis Mangan had a great post (before Google cruelly cyber-assasinated his very useful blog) about the -curse- of future-time orientation in today's political climate. To wit, all of the thrifty savers and planners out there, the leftys in the guv'ment are simply going to make you the paying patsies while they buy the votes of the parasites with loans backed by your future taxes. If you weren't cursed with future-time orientation and had one of those conscience-thingy's and felt the chilvarous beta urges to pay your bills on time, you too could have taken advantage of the lending orgry......um, I mean the increased financing opportunities afforded to the unfortunate by our ever-more compassionate government programs.

Jimmy Crackedcorn said...

The best thing the U.S. Government could do for poor people is to mandate a personal finance course in public high schools.

A personal finance course required for high school graduation would be great, but the kinds of people you're thinking of would sleep through it or would drop out before taking it. My senior year in high school the class size dropped by 15%. There were 100 fewer people in my senior class than my junior class. Those 100 people are the ones who needed it most; the ones who use payday loans; and who wouldn't get it anyway. And even if they paid attention they might not understand it.

How about a personal finance class for food stamp recipients?

Mr. Anon said...

This doesn't eliminate the payday loan business, it just gives traditional banks an incentive to get into that business.

Perhaps Senator Cabbage-Head should propose a law that allows banks to enforce collection of high interest-rate loans by breaking up to one knee-cap per customer per year. That will spare poor people the indignity of having to go to a loan-shark. They could offer numbers games too, in addition to CDs.

l said...

This and Obama's doubling down on the AfPak goatfuck says DC's entered a fugue state.

sabril said...

"How about a personal finance class for food stamp recipients?"

How about we give up on the romantic but failed notion that the underclass can be raised up by means of education?

"The best thing the U.S. Government could do for poor people is to mandate a personal finance course in public high schools"

The best thing the US government could do for (most) poor people is to gently encourage them not to have a lot of children.

Anonymous said...

The Senator should introduce a bill to provide free menthol cigarettes, malt liquor, spinner hubcaps, and hair extensions to ghetto folk. Cut out the banker middlemen.

RandyB said...

This is the weakness of modern liberalism -- the issue isn't minorities qua minorities, it's minorities qua people more likely to be poor. Banks have changed their fee structures to make it exhorbinantly expensive for a person of modest means to obtain the kind of checking services most of us take for granted. So they end up paying for a money order when we'd write a check, or paying to cash their own paychecks that we'd get automatically deposited.

BUT THE ISSUE IS BEING POOR, NOT MINORITY!

David said...

> we should include reforms that will help increase access to many of those who are left out <

Some individuals are "left out" for good reasons. But what have facts to do with healing the world?

DCThrowback said...

Why would we want the government in this line of business? I am sure Kohl's staff looked at this proposal from a political standpoint and thought if the "government option" in payday lending operations could make more people dependent on the Democratic party to make getting micro loans cheaper, the stupid, poor and indigent will pull the lever for us Dems. That's our target market and we are helping them out.

The fact this is was a probable consideration makes me want to puke. The cynicism is almost too much, which is I have come around to Steve's way of thinking that breaking apart the entire Dem coalition by means of turning NAMs against each other is more and more necessary. Just another argument for term limitation/throw the bums out.

Pat Shuff said...

Stevil's housing policy sleuthing finds him in good company with this fellow..

"Mr. Pinto was the chief credit officer at Fannie Mae from 1987 to 1989. He is currently a consultant to the mortgage-finance industry."

The watershed moment was the 1992 Federal Housing Enterprises Financial Safety and Soundness Act, also known as the GSE Act. To comply with that law's "affordable housing" requirements, Fannie Mae and Freddie Mac would acquire more than $6 trillion of single-family loans over the next 16 years.

Congress's goal was to force these two government-sponsored enterprises (GSEs) to purchase loans that had been originated by banks—loans that were made under the pressure of another federal law, the 1977 Community Reinvestment Act (CRA), to increase lending in low- and moderate-income communities.

....

Fannie and Freddie also acquired $2.2 trillion in subprime loans and private securities backed by subprime loans from 1997 to 2007. Acorn and the other advocacy groups succeeded at getting Congress to mandate "innovative and flexible" lending practices such as higher debt ratios and creative definitions of income. And the serious delinquency rate on Fannie and Freddie's $1.5 trillion in high-risk loans was 10.3% as of Sept. 30, 2009.

This is about seven times the delinquency rate on the GSEs' traditional loans. Fifty percent of the high-risk loans are estimated to be CRA loans, with much of the remainder useful to the GSEs in meeting their affordable-housing goals.

The flood of CRA and affordable-housing loans with loosened underwriting standards, combined with declining mortgage interest rates—to 5% in 2003 from 10% in early 1991—resulted in a massive increase in borrowing capacity and fueled a house price bubble of unprecedented magnitude over the period 1997-2006.

Now this history may repeat itself as many of the same community groups are pushing Congress to expand CRA to cover all mortgage lenders, credit unions, insurance companies and others financial industry segments. Are we about to set the stage for another catastrophe?

WSJ Nov 12, 2009

http://tinyurl.com/yze3ort

Bill said...

RandyB says:
Banks have changed their fee structures to make it exhorbinantly expensive for a person of modest means to obtain the kind of checking services most of us take for granted. So they end up paying for a money order when we'd write a check

Citizen's Bank offers a free checking account. You get unlimited check writing, free use of their ATMs, online bill payment, etc --- in other words, it is checking like most of us take for granted. Minimum balance to open is $50. You need to enter a zip code to see the terms: I entered 08215.

Other banks do as well, especially if you are willing to set up direct deposit.

Can you explain what you are talking about?

Anonymous said...

Banks have changed their fee structures to make it exhorbinantly expensive for a person of modest means to obtain the kind of checking services most of us take for granted. So they end up paying for a money order when we'd write a check, or paying to cash their own paychecks that we'd get automatically deposited.

I'm putting you down for that personal finance class.

1) Free checking accounts are easy to get. Banks make bank on the overdrafts. Avoid those and it costs you nothing.

2) Money orders can be had for about 75 cents at Albertsons, WalMart or most other grocery stores.

3) Your paycheck can be cashed for free at the same bank its drawn on. The problem is that ghetto folks don't care to bother to learn that. When I handled the books for a restaurant in the South the kitchen staff (still black back then; probably Hispanic now) used to take their checks to check cashers. I used to tell them "There's a frakking First Tennessee branch right across the street, where they'll cash your damn check for free!"

It seldom sunk in.

Poor people don't need a lot of credit. They don't need a greater ability to borrow, except for maybe a car and possibly a very cheap, already run-down house. More credit only enables the kind of behavior that got us into this mess, and they won't be able to maintain a nice house.

Anonymous said...

unbanked and underbanked consumers.

aka illegal immigrants.

Whiskey said...

The ONLY solution to the underbanking crisis is economic growth that leads to large increases in the lower-tier wages.

This in turn requires a closed border system, to prevent new labor entries, and forbidding (very painfully) outsourcing and insourcing H!-Bs.

It is that straightforward (but not simple).

gwood said...

Go, lemmings, go.

Middletown Girl said...

"The best thing the U.S. Government could do for poor people is to mandate a personal finance course in public high schools."


Good luck. Schools have been teaching kids not to smoke or have teen sex, but just look at the results.

Whatever schools teach is undermined by reality at home--stupidass single mother--and fantasy on TV and pop music which encourage kids to be skankass ho's or punkass pimps.

Ronduck said...

Related to this, Henry Waxman has come out for a government bailout of newspapers. link

Lawful Neutral said...

RandyB,

What country are you living in? Do you seriously think it's hard to get a free checking account? Banks love it when you deposit your money with them. Hmmm, the first bank website I looked at has free checking with a minimum $50 opening deposit. If that's out of reach, you've gone far past "modest means" and into "homeless wino" territory.

Anonymous said...

You are forgetting the obvious: the type of people who frequent payday loan operations don't like banks.

And why don't they like banks? Because banks are run by rich folks, and everybody knows rich folks will screw any and everybody who isn't rich like them.

In light of the events of the past 18 months, I'm starting to relate to that mindset.

Neshobanakni said...

Your friends and neighbors are there for you. Contact you local credit union. We're mostly volunteer, and nonprofit (not that profit's a bad thing). The problem is, if you think you need it in a godawful hurry, then payday lender loansharks are what you will run to. Join a credit Union before you've screwed up your life - we'll work with you when you get in trouble.

ben tillman said...

One of Herb Kohl's nephews was in my class at Brown and was friends with a lot of my friends. I didn't like him them, and now I understand why.

David said...

> Your paycheck can be cashed for free at the same bank its [sic] drawn on. <

When did you stop paying attention - 1989?

You can't cash a paycheck drawn on your employer's bank unless you too have an account there. And of course you're required to display at least one form of picture ID every time you make a withdrawl in person (two picture IDs, at some banks) or swipe your finger across a fingerprint reader. Blithely wandering in clutching a check written on the employer's account is no longer enough. The ID'ing requirements I described are post-2001.

It shouldn't be this way, but it is. Try it sometime.

(Btw - why do most older men stubbornly assume that nothing has changed since they were young[er]? For instance, one AARP member in good standing told me recently that the solution to the current high levels of unemployment was blindingly obvious. "People should do as I did. Simply put on a clean shirt, and ask for a job down at the nearest large factory." This was followed by many minutes of reminiscience. It transpired that the gentleman was recounting events from the early 1960s.)

One reason for check cashing joints and grocery stores that run general check-cashing operations is that many poor workers are too scatterbrained to piece together $100. (One hundred dollars is the minimum amount to open a checking account at most banks 20+ years ago. Mindful of change, I guess it's higher in some places now.) Another reason may be that the level of competence required to deal with a bank is probably intimidating to low-IQ people. Check cashing joints, by contrast, know how to treat this clientele: with flagrant and cold decisive crookedness that at least doesn't force them to re-do sums in their head or to face the possibility that they are somehow mistaken about something. How many times have we seen some black

Anonymous said...

When did you stop paying attention - 1989? You can't cash a paycheck drawn on your employer's bank unless you too have an account there.

No, but that's probably about the last time I tried to cash a check at a bank rather than just depositing it in my own account. Is that really true? Good heavens, there should be a law...

And I have to suspect that maybe it's only true at some banks. I'll have to ask my teller the next time I go in.

Ronduck said...

David, it may even be a little worse than that. I have had a free checking account at Washington Mutual for the last six years, and since I opened an online account I mostly use the WaMu account for cashing small checks that are written to me.

Now that WaMu has been acquired by Chase I can't cash checks there, even though I haven't ever deposited a bad check there. I deposited a $30 check a few weeks ago and Chase placed an automatic hold on the funds for two days. Since I don't have much money in the account Chase decided to hold the check until it cleared locally from Bank of America.

The last time Mike wrote me a check and I took it to his bank (BoA) to be cashed I was asked to step out of line and head to one of the offices on the side of the bank for a manager to approve the transaction.

Anonymous said...

"People should do as I did. Simply put on a clean shirt, and ask for a job down at the nearest large factory."

Factory? I'm not familiar with that term.

It's a Mandarin word, isn't it?