Turning Poverty Into A Multibillion-Dollar Industry
June 8th, 2010Via: NPR:
Payday lending operations have grown rapidly in the United States since the early 1990s. At the industry’s peak a few years ago, there were more payday lenders in the United States than McDonald’s and Burger King stores — combined.
“The payday lender is kind of the emergency banker for the working poor,” explains journalist Gary Rivlin. “The idea is that you have some bills that you have to pay today — your check isn’t coming for a couple weeks, and you can take a loan out against that upcoming check.”
In return, a person agrees to pay interest on the loan — which can be up to “200 percent interest or more on their money,” Rivlin says. “It’s a bridge loan to cover a gap, but the problem is, the gap keeps getting wider and wider.”
Rivlin goes behind the scenes of the payday lending industry in his new book Broke, USA, which examines the $33 billion-a-year “poverty industry.” Rivlin, who attended an annual conference of check cashers to learn industry tips, says he decided to write about the industry because of its rapid growth in recent years.
“I was intrigued by how big these companies had become,” he says. “It used to be that you could drive a Cadillac and have a nice big home through check-cashing or as a pawnbroker. But now people are making tens of millions, if not hundreds of millions, off of these businesses. I wanted to explore a world that seemed upside down to me — where people with little money in their pockets was good for business.”
