All that by way of introducing Book Review No. 35, Gary Rivlin's Broke, USA: From Pawnshops to Poverty, Inc. -- How the Working Poor Became Big Business. Well, not exactly how: it's journalism, and it follows a few of the major players in the legitimate high-risk lending business, some of the homeowners who took out one or another of the loans, and the fate of a few formerly thriving blue-collar neighborhoods now shorn of factories, whose commercial sectors are now the aforementioned check cashers, payday lenders, and pawnshops. Fill out the strip mall with a nail salon, a tanning shop, and a tobacconist and you have Downscale U.S.A. And whoda thought a Wisconsin institution like Thorp Finance would have been a pioneer in the easy credit business.
The major players are not necessarily the wizards of high finance, those who have made it big exhibit all the tacky noveaux-riches trappings, and author Rivlin is clearly sympathetic to the borrowers trapped by the steep penalties for missing a payment, or lawyered out of their houses. He resists the temptation to advocate for new legislation or a populist uprising.
The unspoken message of Broke USA is that a little financial literacy can go a long way. Resist credit. Never borrow from a lender who charges prepayment penalties. Never initial anything you can't read and understand first. (The supposed consumer protection provided by a blizzard of paper allows the lenders to overwhelm borrowers with a lot of stuff notionally "required by the government.") Almost makes declaring your friendship to Don Vito look easy. There's the tradeoff -- usury laws or tighter creditworthiness standards or limits on penalties do not put the poverty industry out of business -- it reverts to its older form.
(Cross-posted to Cold Spring Shops.)