Tag: predatory lending

👓 ‘A way of monetizing poor people’: How private equity firms make money offering loans to cash-strapped Americans | Washington Post

Read ‘A way of monetizing poor people’: How private equity firms make money offering loans to cash-strapped Americans (Washington Post)
As treasury secretary, Tim Geithner criticized predatory lenders. Now the private equity firm he leads runs a company that mails high-rate loans to risky customers.

📑 ‘A way of monetizing poor people’: How private equity firms make money offering loans to cash-strapped Americans | Washington Post

Annotated ‘A way of monetizing poor people’: How private equity firms make money offering loans to cash-strapped Americans (Washington Post)
Despite the risks, however, Mariner Finance is eager to gain new customers. The company declined to say how many unsolicited checks it mails out, but because only about 1 percent of recipients cash them, the number is probably in the millions. The “loans-by-mail” program accounted for 28 percent of Mariner’s loans issued in the third quarter of 2017, according to Kroll. Mariner’s two largest competitors, by contrast, rarely use the tactic.
Incidentally 1% is the response rate necessary to make spam email and fax financially viable. Coincidence?

Do businesses that rely on a low response rate of 1-2% and succeed have something in common? Could they all be considered predatory?