Tuesday, August 28, 2007

An Improvement in the Fringe Economy

Scott writes in Two Cheers for Credit Union about the development of a Payday loan between Goodwill and a credit union in Wisconsin that would allow workers to avoid the insanely high interest rate of most payday loan establishments.

Payday loan businesses are part of the fringe economy, which I've written about in Borrowing on the Fringes. This is a particularly nasty slice of business. Big corporations, including the biggest like CitiCorp, operate largely unregulated loan centers that take advantage of the poor and credit-poor with interest rates in the 500% category. And as you might imagine the fringe economy is booming.