Topic: Payday Loans

Don Lemon and the Washington Post are accused of spreading "blatant lies" by claiming that bridge loans were predatory or carried 9% interest rates. The hosts argue that these outlets ignored the widespread availability of zero-interest options from credit unions. This lack of accurate information is seen as a failure to provide the public with valuable, actionable financial advice during the shutdown.

A report from the Refund America Project detailed "predatory" lending practices in Puerto Rico, where the island borrowed $4.3 billion but faces $33.5 billion in interest payments. These "capital appreciation bonds" function similarly to payday loans, with some deals deferring principal and interest for 47 years. Major banks including Goldman Sachs and Citigroup were named as lead underwriters for these deals.

A report on the payday loan industry highlights how borrowers become trapped in cycles of debt with interest rates exceeding 300%. The industry flourished in South Dakota after the state eliminated usury laws to attract major credit card companies. The rise of these "predatory" lenders is linked to the consolidation of community banks into large entities like Citibank and Chase.

President Obama's push for the Consumer Financial Protection Bureau to regulate payday loans is analyzed. The hosts compare the high fees of payday lenders to the even higher effective APRs of credit card late fees and utility penalties. They argue that while payday loans can be predatory, the broader financial system—including student loans—operates on similar principles of debt entrapment.

The weakening of consumer protection laws in the United States is traced back through several administrations, leading to the rise of legal "loan sharking." Payday loan companies are criticized for targeting veterans and low-income individuals with exorbitant fees. The discussion notes a lack of focus on these issues during recent political campaigns.