If you cap interest rates won't banks stop lending

[hill2016]

To their riskiest clients especially on an unsecured basis?

Hope Bernie has thought this one through

[Xipe Totec]

1. What makes you think they're lending to them now? nt

Last edited Tue Jan 5, 2016, 11:45 PM - Edit history (1)

[Luminous Animal]

2. And they should stop lending to their riskiest clients.

[hill2016]

3. i'm guessing if they do

There will be an outcry over the riskiest clients who can't get access to bank credit because banks are evil or redlining or something

[Luminous Animal]

8. And if so, a legitimate case for a class action suit.

Why should someone pay 28%-35% interest on their credit card simply because they are deemed "risky". There is a far better chance of someone maintaining their payments at a lower interest rate.

[hill2016]

22. nobody

has the right to a loan at any interest rate.

[TCJ70]

4. If someone is so risky...

...and you don't think they'll pay you back:
1. Why would you lend to them anyway?
2. Is charging an outrageous interest rate the best way to get anything back?

[hill2016]

6. Because it's a numbers game

On probabily x% of these borrowers will default and you recover y% of principal. You don't know who will default so you charge people with this credit profile z%.

You set z so it covers x and y and leaves you with a profit.

[Warren Stupidity]

5. You mean like the insane obscene credit card rates or the insane obscene payday rates?

Which of those do you think ought not to be capped?

[hill2016]

7. If banks find it

Unprofitable to lend to people with a certain credit profile they will stop doing that.

The real question is: do you want to cut these people from access to credit?

[exboyfil]

9. Another point

Even if it is illegal someone will still loan the money at rates and collection practices that exceed even those of Payday loans.

[Warren Stupidity]

12. yes that is true, there are loan sharks.

That is not a particularly good reason for making loan sharkery legal.

[Matariki]

10. Oh haha. "Let the Market decide"

where has that been heard before?

[Warren Stupidity]

11. Again, do you mean you are against a cap on obscene credit card rates

or obscene payday loan rates, or both?

You know you can be 'for Hillary' and not 'against everything Sanders is for', right? You don't actually have to box yourself into uttering republican talking points.

[hack89]

14. I have no problems with caps

I just understand that the result will be many people losing access to credit. There is no way around that fact.

[Paulie]

15. There is a way around it

A living wage job. Less need for obscene credit just to put food "on the family".

[Warren Stupidity]

21. So as far as payday loan sharking - Sanders is also proposing doing what a lot of other

countries do - use the postal service as a very low cost public banking service. Payday loan sharking is a bullshit service that should be replaced with a public service.

The credit card companies will continue to issue credit cards, they just won't be able to gouge people with ridiculous interest rates. "Many people" is a completely ambiguous statement. Some people will have more difficulty getting a card, but only because they have truly lousy credit and probably shouldn't have a card. I rather doubt that capping card rates at some level based on current prime rates would have a huge impact on access.

States effectively regulated credit card rates until Marquette National Bank v. First of Omaha Service Corp - http://consumer.findlaw.com/credit-banking-finance/usury-laws.html#sthash.TdebVwlg.dpuf in 1978 and the Reagan era Depository Institutions Deregulation and Monetary Control Act of 1980 - See more at: http://consumer.findlaw.com/credit-banking-finance/usury-laws.html#sthash.TdebVwlg.dpuf put an end to that. There was no great shortage of credit cards prior to that.

[Motown_Johnny]

20. Bernie wants to allow Post Offices to offer basic banking services

which would expand access to credit for people of lower income.

Haven't you thought this through?

[reformist2]

13. Maybe we ought to have a national bank of the people that will charge reasonable rates!

[Paulie]

16. How about starting with check cashing?

Bernie Sanders's Highly Sensible Plan to Turn Post Offices Into Banks

http://www.theatlantic.com/business/archive/2015/10/bernie-sanders-lets-turn-post-offices-into-banks/411589/

[GoneFishin]

17. Plenty of people will try to fill any lending void if one ever came to exist. The banks make excuses

to gouge people who are not a credit risk. I once had my interest rate jacked up over 10% for no discernible reason except that it coincided exactly with when I paid off my only other card and cancelled it, so my only remaining card was the one with the jacked up rate.

[leftofcool]

23. What "Plenty of people?"

Who exactly do you think can fill a lending void?

[Hiraeth]

18. no they won't and yes, he has.

[Motown_Johnny]

19. That is just crazy talk. The suggested cap is 15%.

Your line of reasoning is exactly the same as "If you raise my tax rate I will stop working". We already know that threat is empty.

Maybe you should think something through instead of taking desperate shots at a reasonable policy proposal.



Context: (and by the way, he is still playing even now)

http://www.dailykos.com/story/2013/1/21/1180771/-Oh-Noes-Phil-Mickelson-R-Golf-Might-Retire-Citing-Incorrectly-Tax-Hikes-on-Top-1-Boo-hoo

^snip^

Oh Noes!!--Phil Mickelson (R-Golf) Might Retire, Citing (Incorrectly) Tax Hikes on Top 1%--Boo-hoo.

Monday Jan 21, 2013 10:24 AM EST


Mickelson says he might retire or move from California.

"I'm not sure what exactly, you know, I'm going to do yet," Mickelson said. "I'll probably talk about it more in depth next week. I'm not going to jump the gun, but there are going to be some. There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state and, you know, it doesn't work for me right now. So I'm going to have to make some changes."

Conservative bloggers are already gloating about how this is some kind of sign that Obama, the big meanie who loves to stick it rich people (even though he is one of them), is going to destroy capitalism or some other such nonsense.

Of course, Mickelson, who is a Republican according to a number of sites that list "Republican Celebrities," describes his tax situation in notably false terms.

"If you add up all the federal and you look at the disability and the unemployment and the Social Security and the state, my tax rate's 62, 63 percent,"