Wilbur Ross, Federal Reserve, Thousand Dollars discussed on The Takeaway
Pawn pay. Day, title loans, all of these things are varieties of the same thing. What Pont is is you're bringing in a product of value. So you're, you know, wedding ring, your laptop something like that. And they're giving you a loan and they're holding onto this piece of property as collateral. It's not about the the ring or the laptop. They don't really want to resell that that's just there in case you default. What the, you know, the business model of these of these lenders is the interest and fees that you're paying on the loan itself. So the pond broker is sort of taking something from you just in case you default that's same thing with title loan. So titled owns is the take the title to your car. So in the event that you don't pay back the loan and all the fees and interest. They're able to take your car over payday is you're there is nothing as collateral, but they can garnish wages and things like them. Let's talk about who's taking out these loans. I mean, we're talking about this, obviously, there was a spike during the government shutdown, and we did extensive reporting here on the show about how families were struggling to get by many. The American families are living paycheck to paycheck can't afford to take a couple of weeks without pay. But generally, speaking beyond what we see in the shutdown who is the target demographic. If any for this type of product, I mean, these are in to quote of politicians the average American this is not a there's not the destitute. You have to have a paycheck. You have to have an income to take out a payday loan. And so the Federal Reserve at the study about half of the American population, if they need it if they had a shortfall of about a thousand dollars, they would have to borrow to make ends meet. So if you need a thousand dollars, let's say if you're furloughed federal employee who doesn't have a ton of savings, which is the case for most Americans because we're just not making enough wages to meet our expenses. You would have to borrow that money because you're not getting paid. And so some of us can go to friends and family to borrow some of us can have some other means of getting that income, but but that's complicated on its own right, friends and family, there's other sort of calm. Complexities that come out one. There are and and I want to bring in one more voice here because we're talking about the complications of that. Let's take a listen to what our commerce secretary Wilbur Ross had to say about this issue of the credit union should be making credit available to them true. The people might have to pay a little bit of interest. But the idea that it's paycheck or zero is not a really valid idea. I wanna sort of break that down because that's the commerce secretary Wilbur Ross as telling people to take out loans for quote a little bit of interest. And that the idea of not having a paycheck. It's paycheck or nothing is not valid. Let's be realistic. How valid is that comment that is shocking level of ignorance of how banks and credit unions work. I mean, banks and credit unions haven't been able to give consumers or haven't been interested in giving consumer loans since the nineteen hundred it is impossible to walk into your Bank and.