Largest Predatory Lender in the US

[volinbham]

Food for thought

The Largest Predatory Lender in America | The Weekly Standard

What would you think of a lender that has holds more than one $1 trillion in loans outstanding, targets low income and minority borrowers, has a payment delinquency and default rate in excess of 25 percent, and has postponed repayment on 14 percent of its loans, but is still accruing interest on them? Wouldn't you think that some government agency—say, the Consumer Financial Protection Bureau, the Federal Reserve, or even Congress—would be investigating this perfect definition of a predatory lender and trying to shut it down?

The Consumer Financial Protection Bureau, always quick to chase down payday and sub-prime mortgage lenders, says that if a lender does not, "…verify customers' income and confirm that they can afford to repay the money they borrow," they are a predatory lender. So how does the government verify a 17 year old's income right out of high school and confirm that four to six years later when—actually, if—they graduate from college they can afford to pay back their student debt? Clearly with more than a quarter of all student loans in default, the Department of Education isn't following the bureau's guideline and by their own definition is a predatory lender.

The PLUS program is the single most profitable loan program of the more than 120 ways the government lends. It's even more profitable than SBA loans and Treasury Department advances to the Federal Reserve. Currently, the program makes loans at a 7 percent interest rate with a 4 percent origination fee. This is almost double the rate charged on loans made directly to students, and those are made without any origination fee. Parents of college students would be better off taking a second mortgage on their home than borrowing under this program. Additionally, direct loans don't begin to accrue interest until the student leaves school whereas with Parent PLUS the interest rate clock begins ticking day one. The White House Budget Office says that even after defaults and bad debts, they expect to collect $1.23 for every $1.00 they lend with Parent PLUS. That's an astonishingly profitable program.

 

[Rasputin_Vol]

So what are you saying? I already started a similar thread to this and I had you and several others call me everything from a deadbeat to a communist.

Although this is an extreme example of student loan financing (interest accruing on Day 1), the point remains the same.

The Consumer Financial Protection Bureau, always quick to chase down payday and sub-prime mortgage lenders, says that if a lender does not, "…verify customers' income and confirm that they can afford to repay the money they borrow," they are a predatory lender. So how does the government verify a 17 year old's income right out of high school and confirm that four to six years later when—actually, if—they graduate from college they can afford to pay back their student debt? Clearly with more than a quarter of all student loans in default, the Department of Education isn't following the bureau's guideline and by their own definition is a predatory lender.

Again, this isn't much different than what I've been saying. We hold 18 year olds to a different set of rules than most 30-40 years olds are held to.

 

[MT LeConte]

I like Bernie.

 

[BigOrangeTrain]

I like Bernie.

Of course you do. You love China.

 

[joevol320]

I like Bernie.

that's because you don't work and you fit in the low info voter category.

 

[volinbham]

So what are you saying? I already started a similar thread to this and I had you and several others call me everything from a deadbeat to a communist.

Although this is an extreme example of student loan financing (interest accruing on Day 1), the point remains the same.



Again, this isn't much different than what I've been saying. We hold 18 year olds to a different set of rules than most 30-40 years olds are held to.

IIRC you were advocating for a massive forgiving of all student loan debt.

All I'm saying is that as a lender the government is as bad or worse than the Evil Banks it's hot to add more regulations too. Elizabeth Warren would be on the warpath if the US govt was a private bank.

 

[Rasputin_Vol]

IIRC you were advocating for a massive forgiving of all student loan debt.

Correct, either all or most of their debt.

So what is your point? We are staring down the barrel of a possible Deutsche bank bailout or some other kind of assistance for these European banks, and we have exactly 0% chance of paying off the soon to be $20 trillion that we are already in debt.

No one has given a convincing argument why we should bailout again and again a group of 40+ year old adults that make bad (criminal) decisions while we allow the next generation to languish in debt.

 

[volinbham]

Correct, either all or most of their debt.

So what is your point? We are staring down the barrel of a possible Deutsche bank bailout or some other kind of assistance for these European banks, and we have exactly 0% chance of paying off the soon to be $20 trillion that we are already in debt.

No one has given a convincing argument why we should bailout again and again a group of 40+ year old adults that make bad (criminal) decisions while we allow the next generation to languish in debt.

Our past bank bailouts were paid back - they were not debt forgiveness programs.

You've recently plenty of good arguments against what you advocate but none convince YOU. That doesn't mean they aren't convincing arguments.

 

[bamawriter]

Our past bank bailouts were paid back - they were not debt forgiveness programs.

You've recently plenty of good arguments against what you advocate but none convince YOU. That doesn't mean they aren't convincing arguments.

At least Ras seems to be absorbing the fact that student debt is held by the government. It makes him revise his "evil bankers" theory, but he's at least coming closer to dealing in reality.

 

[Rasputin_Vol]

Our past bank bailouts were paid back - they were not debt forgiveness programs.

What do you mean? The Federal Reserve ended up absorbing these banks toxic loans.

 

[Rasputin_Vol]

At least Ras seems to be absorbing the fact that student debt is held by the government. It makes him revise his "evil bankers" theory, but he's at least coming closer to dealing in reality.

I blame both the bankers and the govt. Both are responsible, but the bankers pull the strings.

How is this even being disputed?

 

[bamawriter]

I blame both the bankers and the govt. Both are responsible, but the bankers pull the strings.

How is this even being disputed?

Far fewer student borrowers defaulted when the banks were doing the lending. Rates were lower, too.

 

[Rasputin_Vol]

Far fewer student borrowers defaulted when the banks were doing the lending. Rates were lower, too.

The govt doesn't control rates... nor lending for that matter.

 

[Burger]

The govt doesn't control rates... nor lending for that matter.

The federal reserve controls interest rates in this country. The World Bank controls the value of prime around the world.

 

[n_huffhines]

My question is how much of our boom is a result of "non prime" lending?

Subprime Loans Are Back, Proving We Have Learned Nothing from 2008 | Brittany Hunter

 

[85SugarVol]

My question is how much of our boom is a result of "non prime" lending?

Subprime Loans Are Back, Proving We Have Learned Nothing from 2008 | Brittany Hunter

Scary

 

[McDad]

Scary

It should make us pause and reconsider lending practices. However, speaking selfishly, the last crises allowed us to increase our net worth substantially. We cashed in every liquid asset we had went "all in" on real estate. For us, the bubble bursting was like going back in time 10-20 years in terms of home prices. If it happens again, I'll do it again and even accelerate it.

I hope no one over extends. I hope no one loses their home. But if it happens ill swoop in and pick up their scraps.

 

[Rasputin_Vol]

My question is how much of our boom is a result of "non prime" lending?

Need Cash Fast? US Bank Unveils Payday Loan Program With 88% APR

 

[n_huffhines]

 

[Obsessed]

View attachment 172977

Trump better be careful about this. The last president that suggested this was killed for it.

 

[MercyPercy]

It should make us pause and reconsider lending practices. However, speaking selfishly, the last crises allowed us to increase our net worth substantially. We cashed in every liquid asset we had went "all in" on real estate. For us, the bubble bursting was like going back in time 10-20 years in terms of home prices. If it happens again, I'll do it again and even accelerate it.

I hope no one over extends. I hope no one loses their home. But if it happens ill swoop in and pick up their scraps.

I'm a little turned on.

 

[Matt2496]

My question is how much of our boom is a result of "non prime" lending?

Subprime Loans Are Back, Proving We Have Learned Nothing from 2008 | Brittany Hunter

I assume that when a crash occurs it will be all Trump's fault the same way it was Bush's in 2008?

 

[tumscalcium]

I assume that when a crash occurs it will be all Trump's fault the same way it was Bush's in 2008?

Obama. He’s claiming responsibility for the economy.

 

[Matt2496]

Obama. He’s claiming responsibility for the economy.

Yep. If the economy is doing well it's all Obama's "amazing" policies. If it goes bad, they just blame the latest R President.

In reality, Presidents have little control over what happens at the stock market.

 

[VolET]

It should make us pause and reconsider lending practices. However, speaking selfishly, the last crises allowed us to increase our net worth substantially. We cashed in every liquid asset we had went "all in" on real estate. For us, the bubble bursting was like going back in time 10-20 years in terms of home prices. If it happens again, I'll do it again and even accelerate it.

I hope no one over extends. I hope no one loses their home. But if it happens ill swoop in and pick up their scraps.