NPR’s Fresh Air recently invited Gary Rivlin to share his research on predatory lending in the United States. Rivlin’s work is particularly pertinent at a time when Americans are strapped for cash and stretching their dollars, especially at the bottom of the socioeconomic pyramid. His work is not only pertinent to the current economic climate, but to the initiative that Rubicon National Social Innovations is launching through our new social business, Emerge.
Payday lending accentuates the problems people who live paycheck to paycheck face, putting them at odds with making ends meet as roll-overs lead them to face nearly 400%+ APR while paying back their advance. Rivlin makes it clear that the same payday lenders that many might see as exploiting the poor working class see themselves as nobly extending services that would otherwise not be available to a large population of people. At the same time, he tells a very clear story of how the flight of traditional banks combined with the much-higher-than-average profit margins to be made by serving the working poor lead to the abundance of payday lenders in poor, urban areas.
Our alternative business model, Emerge, is positioned to fill the gap left by the imbalance in the marketplace. Seeking to systematically bring about a more equitable society through its employer-based credit offerings, Emerge aims to migrate the underbanked from predatory high-profit payday lenders toward mainstream financial services. -Josh Engel, Summer Associate
Listen to the full NPR interview with Gary Rivlin.