ZestFinance Aims to Fix Underwriting for the Underbanked

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Interesting article which addresses part of the problem. I take exception to the comment "Payday lenders aren't evil". As a general rule they are EVIL because they place most of their borrowers into a financial death spiral. They make it convenient and lull the borrower into a false sense that they do not need financial help in budgeting and learning to say no to stuff, addictions, and other social elements that have placed them into this situation.

There are many elements of "short-term loans" that can be accomplished via the statistics and that is good for a segment of customers that may need a one-time fix. But look at the four big banks that are involved in payday lending to their own customers. Tell me they are not EVIL when they are earning an ROE of about 1000% after tax on the backs of their own customers. The fundamental question is "How does this product help customers prosper and advance financially?" If its chief effect is to keep poor people poor and help folks move down then it does not belong in the line-up of a taxpayer backed, too big to fail bank. and it really does not need to be an exception to usury caps established by individual states for the protection of their citizens. And, to the degree that it makes poor people poorer, who is paying for the "entitlements" that they will need? It looks like a pass through of money from taxpayers to the payday lenders.
Posted by frankarauscher | Tuesday, November 20 2012 at 1:00PM ET
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