Payday Loan Business

Wow. Google payday loan business and you'll get over 2 million hits. Many are singing the praises of this business:

How to Start a Payday Loan Business

Why should you buy a payday loan or other money lending business?

You'll also see snippets like this one:

H&R Block To Settle More Payday Loan Suits ...

Some call it Legal Loansharking. Thought the 24% APR on a credit card was tough? On the average payday loan of $300 for eight days, a 15% fee equates to an APR of 459% according to Maureen Rooney.

But there's a story within the story. These seedy store fronts you see in depressed neighborhoods are "Big Business" posing as a little businesses, like Citigroup.

According to Danny Schechter, who appeared on Media Matters March 25, 2007 points to a similar operation.

One of the phenonomena that is very topical is people who go to various tax preparation services to get their refunds right away... they end up paying an exhorbtant fee charge on this. What we discovered was that there were these rat trap kind of little store fronts in the ghetto ... and behind the scenes was the HSBC Bank which was taking $1.6 Billion dollars out of poor neighborhoods with these tax refund businesses brokered through all kinds of differerent companies including H&R Block.

We tried to interview the head of this program at HSBC, and of course they refused to go on camera. Just the other day HSBC reported a $10 Billion dollar loss on its subprime loan situation. So, a lot of these people who are predators, predatory lenders, are now facing a big problem because these people have defaulted and they are left holding the bag, though they have made a small fortune on it.

One of the things I also found out about was a hundred thousand veterans coming back from Iraq, who are in hock up to their eyeballs, and have these payday loans, and down in Norfolk, Virginia, where we did some filming we found out that there were like three payday lenders around the base in Norfolk a year ago. Today there are twenty-six lenders

Danny Schechter continues to describe the Naval and Marine Corps relief society, which has researched the situation. They've discovered that the problem payday lenders are causing serious pain for military families.

Schechter continues to point out that the progressive community "by and large has not really spoken out on this."

People who are in MoveOn and other groups... and a lot of the bloggers are totally focused on every burp in Washington, every mini scandal problem to show that Bush is a liar, he's a liar, he's a liar, how many times have we heard that? But they don't really look at the institutional issues. And they don't look at the economic issues too often. So what I'm encouraging ... is that we have to focus on the economic realities, not just the political realities.

Schecter expands on this in an March 26, 2007 article entitled, "Lets Broaden Our Focus To Include Economic Issues: It’s Time To ‘Stop The Squeeze’" not Scheckter
.