opinion, payday lending, it is like loan sharking. the president s pick to head the consumer financial bureau has proposed eliminating rules that eliminate the number of back-to-back loans that can be made. now, she wants to require lenders to verify that the bar work can even repay the loan on time while covering living expenses. for facts sake, it is important to understand what these loans are and the massive risk they pose. please watch this. payday lending marketed as a convenient way for millions of poor americans with no credit to get a small loan, as long as you have a job and a bank account. for every $100 you want, you can take out a two-week loan. almost like an advance on your next paycheck. seven out of ten borrowers use
galloway. these blow backs, these blow my mind. payday lending is the most predatory lending to the most vulnerable borrowers. so i will give you the rational or i will give you the talk track, the talk track is if you unleash this industry from regulations that ll track more players in the invisible hand of competition will bring down rates and offering more products to them. that was not the case before the financial crisis. these guys were the definition of loan sharks before they had the regulation, they were not any better, they were horrible. that s why we got the regulation in response of their practices. let me be clear, i believe this is a false narrative and there is a lot of evidence showing it is a false narrative. one number stood out and before we began talking is the annual interest rate is 400%. we are talking about the most
payday loan each year wound up spending. payday lenders insist they do not market their product as long-term financial solutions. none of which counts as payments towards their under lining loans. critics say that kind of business model fuels a cycle of loans and more debt. which is kind of a point. it should come no surprise that 15 states already banned high cost payday lending. why this predatory practice is not a high priority for the trump administration is anyone s gues guess. i want to make it clear, the new head, i invite you to have a conversation with me. why are you doing this? joining me now, business professor, my dear friend, scott
those people looked at him and said screw you, dude. and then trump gets elected and this deregulatory environment is only going to be hurt. here s what they re being none of this payday lending activity would exist if there weren t a need for it. we re talking about the symptom. the cause is that half the country can t access $500. if we regulate financial institutions, then you ll have access to no money, which, of course, is an absolute lie. the same lie they tell about why wall street needs to be more lightly regulated. let s talk about what that money is. if your car breaks down and you need to go to work and you don t have money to get it repaired, you cannot earn a living. this is not people borrowing money to get jewelry. this isn t people borrowing money to take a vacation. generally it s people borrowing money to keep their lives together. and we used to call this loan sharking, not payday lending.
makes a lot of sense. you are absolutely right, should these people be able to borrow at 2%? no. there is a lot of ground to cover between 2% than 400%. remember, regulation is not here to stop business. smart regulation is put in place so good business can move forward and so civilians won t get abuse and taken advantage of. payday lending, one way road to a bad place. scott, great to see you. i like the beard, thank you for watching this hour of velshi and ruhle, i will see you tomorrow at 9:00 a.m. right now my dear friend katy tur joins us. we ll talk about payday lending as well on this show. we have our robert rice on. he s going to talk about that and his book and also the 2020 tax plans being proposed by the democrats. if you want more of that, stay right here, stephanie ruhle. thank you, this payday