'Fringe economy' preys on the poor' Where Is The Dem Party?

[Jon8503]

This is an example of an issue I feel the Democratic party should take on. First it is a moral issue the party used to be concerned about. Secondly, these are voters, this is an example of where the party could show what it stands for and show people who are in these kind of situations they are fighting for them. Cast your votes our way because we will and can help but we need your help as well and you can simply do that by "voting". However, why should these people take the time because the party doesn't seem to put up a fight for anything anymore. It is more concered as the other party about their corporate contributions and lobbying.

Commentary by Yolanda Young - Fri Jan 27, 7:05 AM ET

You see them along urban thoroughfares and on the corners in poor neighborhoods: check-cashing centers, pawnshops, "payday loan" establishments and rent-to-own furniture stores. This industry comprises what University of Houston professor Howard Karger refers to in his new book as the "fringe economy."

This new phenomenon, according to Shortchanged: Life and Debt in the Fringe Economy, experienced "almost exponential growth during the mid-1990s." In 2001, the "fringe economy" accumulated $78 billion in gross revenue. These fringe businesses make their money off the poor by charging them exorbitant interest rates or bloated or hidden fees because their customers lack good credit, bank accounts or other options. The growth of these businesses has coincided with a swing in the country's wealth. In 1970, roughly the bottom third (or about 96 million) of Americans earned 10 times that of the top 1%, Karger writes. By 2004, though, the top 1% (29,000) made as much as the bottom third of Americans. Today, 53% of Americans live paycheck to paycheck, and 56 million don't have bank accounts. The robust fringe economy has also come at a time when household debt is increasing rapidly, when many banks are increasing minimum payments, late penalties and interest rates on credit card debt, and when bankruptcies, according to the American Bankruptcy Institute, skyrocketed more than 400% from 1975 to 2003.

Where once pawn shops were perceived as havens of the thief, gambler or crackhead, and rent-to-own stores were used primarily by college students, today they are frequented by the working poor. Karger notes that the average payday loan customer is a woman ages 24 to 44 with a high school diploma and earning less than $40,000 a year. With such a tight budget, one unexpected event becomes a crisis. While more consumer discipline is in order, many poor are beyond this point. Stagnant wages and increased costs of housing, transportation and food are huge contributors to indebtedness. The poor need more protection. Among the possible steps:

• More government regulation is required in policing shady schemes, inflated interest rates and fees on loans and services, and unfair mortgage lending.

• Mainstream financial institutions should be encouraged to make credit cards more difficult to get and work with customers on ways to pay off their debt.

• Consumer-interest organizations need to help educate the financially illiterate.

Karger likens the hold the fringe industry has on the poor to the grip landowners had on black sharecroppers after slavery. When it comes to exploitive practices, the poor are always the first victims.

Yolanda Young is author of On Our Way To Beautiful.

http://news.yahoo.com/s/usatoday/20060127/cm_usatoday/fringeeconomypreysonthepoor;_ylt=At57EbJeufVxDqbH5Qv5HeL9wxIF;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--

[Karmadillo]

1. When poor people buy the Democratic Party, maybe then

they'll get some much needed support. Until then, it's whatever the corporate owners demand and if that means eating the poor, that means eating the poor.

[NoFederales]

2. All corporate politicians are to blame for the sad conditions of the poor

working class. They have enabled the "fringe industry" to line their pockets at the expense of wages, benefits, and the environment. These human conditions regarding welfare used to be a social concern for politicians; now, sadly, it is just an expediancy if even an afterthought.

The M.O. of the corporate politician: Life Is Cheap;We Get Ours. And we may no longer be able to get rid of these misanthropes.

NoFederales

[Warpy]

3. I don't know which party is blocking predatory lending

legislation in my state (NM), but I suspect it's a coalition of corrupt men in both. It's so terrible that the state Attorney General (a Democrat, of course) has been putting out PSAs in primetime pointing out what the yearly interest rates are and how many of those vultures are just outside the gates of military bases, 'cause that's who they prey on most of all.

Hell, even credit cards are in the usury business now, charging up to 39% interest on people who have fallen behind in bills due to the Asswipe economy.

We so desperately need to break the connection between the rich and the religiously insane and get these looters out of power so we can get some protective legislation. Crooks and cheaters will never leave us. The job is never done.

[pitohui]

7. we need a limit on interest rates and fees

the usury laws of the 1970s and earlier need to be re-instated so that high fees and way above normal interest rates again become a crime

however i don't want to totally close down all sub-prime lenders, because they are the only lender for many people, i just think that a fair profit (such as 18 percent annual interest) rather than usurious profit (39 percent and more! sometimes even monthly at the paycheck cashers), many of these places are charging rates that are actually higher than you got from the old time mob loan sharks

i have no objection to a fair profit for risk but an unfair and extortionist profit all out of proportion to the risk, that's quite another thing and should be re-criminalized

have i said yet today how much i hate ronald reagan? never forget his administration was responsible for legalizing usury

[Boojatta]

4. "Among the possible steps"

• More government regulation is required in policing shady schemes, inflated interest rates and fees on loans and services, and unfair mortgage lending.

What is the meaning of the words "regulation is required in policing"? "Regulation" sounds like legislation, but "policing" sounds like enforcement.

• Mainstream financial institutions should be encouraged to make credit cards more difficult to get (...)

"Encouraged" here means what? They should be offered something that they want? Who will provide it? Perhaps they are to be "encouraged" to do something by threatening them with penalties? Also, what does it mean to "make credit cards more difficult to get"? Should financial institutions be more selective or should they create bureaucratic red tape that will make getting a credit card a chore for everyone?

• Consumer-interest organizations need to help educate the financially illiterate.

Why can't the public schools provide that kind of education? Are they too busy getting people to memorize exact dates of historical events?

[BiggJawn]

5. I don't know if you can draw a connexion or not...

...but I noticed these paycheck-loansharks and hock shops springing up like weeds once the State got into the gambling business.

Get a loan against your next paycheck, ot pawn your deer gun, take the money and go buy more PowerBall tickets.

I'm really beginning to think that most the social problems we have in this country are because our "elected" officials have absolutely NO clue what's it's like to live on 1/3rd to 1/10th of their own income.
Not ONE bit of empathy for what it's like to spend 6 hours's pay every week to be able to go back and forth to work, or have to work 2 weeks to pay the rent, and healthcare? Hah.

Here in Indiana they recently moved to end the practice of free lifetime health insurance for members of the House of Bubbas. One State Rep was ALL upset: "I'm a small businessman! I can't afford health insurance! I NEED this coverage for my family!"

Duh, ya THINK so, Sparky? If the MASSAH can't afford insurance to cover his daughter's cheerlading injuries, how do you think your SERFS cope with THEIR problems?

Oh, yeah, you have "WallMart-Style" health care. Your Serfs get hurt, they go to the County Hospital...

[pitohui]

6. the connection goes back to ronald reagan

it might look like an "a" caused "b" because they both seemed to happen around the same time

states and reservations were going broke in the 80s, thank you ronnie, had to look for new ways of revenue, the new buffalo of legal gambling came to the rescue

also in the 80s reagan basically pushed and got a legalization of usury

so you see both pop up like mushrooms at the same time but it isn't that the casinos caused the loansharking, they both had root origin in changes in legislation that took place in the 80s

[BiggJawn]

8. Yes, that's when it started.

The State has their lotteries that were SUPPOSED to raise funds for Public Pensions, but I gotta tell ya, *I* sure ain't getting rich because I'm vested in PERF... and EVERY week, they come up with a new "game" that costs more and promises quicker riches.

What a disconnnect.... you can go to the 7-11 and buy $500 worth of "Scratch and Lose" tickets, yet they raid the Pea-Shake game down at the barber shop and put old Amos away for 10 years...

Gambling in general, and the state-run lotteries in particular are just a hidden tax on people who suck at Math.
And there stands the hock-shops, ready to finance your next try at wealth. It may not be a chicken-egg relationship between the two, but it most definitely IS a symbiotic relationship.
They each feed off the other.