Some of the most important pathways to middle class American life become out of reach when one has little or no credit history. Buying a car or house, or sending a child to college can become close to impossible.
To see a television advertisement for a business offering payday loans is to see payday loans advertised as a lifeline: a way for a financially strapped family to cover an unexpected expense. But that's not actually how most payday loans are used.
The Justice Department and the Consumer Financial Protection Bureau have sent civil subpoenas to dozens of financial companies, including the online lenders, many of which are located on Indian reservations to avoid complying with consumer protection laws.
"Financial reform" is a boon for people in the payday loan business. When people fall out of the world of traditional banking, they are still going to need bank-like services. Payday lenders will be in position to fill the gap.