I love the way this podcast from the talented folks at NPR’s “Planet Money” opens: with an ad the payday lending industry created to oppose a range of reform measures working their way through Congress (the subject of my last blog entry). Except here, when the industry is calling the shots, they’re not payday lenders charging horrifically high fees but instead “local, short-term lenders” there “to help ends meet.”
That’s the new thing, I discovered when researching my book. The term ‘payday’ has grown so toxic that some in the business avoid the phrase altogether. Mike Hodges, for instance, who operates 21 stores in the Nashville area with his wife Tina, uses “cash advances” in the local TV ads it runs while Amscot Financial sometimes uses the phrase “life-line product.”
But the playful opening to this 27-minute episode is only the start. Taken as a whole, this piece serves as a fair-minded dissection of a controversial topic. That’s self-serving of me to say; I’m part of the broadcast (I show up at around the 10-minute mark) and I also served as a kind of unofficial consultant to the show, knowledgeable in all things fringe finance-y and subprime. Often I’m hearing my own voice even if it’s not me speaking.
With that said, this ambitious broadcast shows off Planet Money’s flair for explaining the complicated in clear terms easy to understand (no surprise there—co-host Alex Blumberg won the George Polk Award in Radio Reporting, with Adam Davidson, for “The Giant Pool of Money,” a terrific show appearing on “This American Life” in 2008 that did as good a job explaining the subprime meltdown as anything else I read, saw, or heard). It also treats its listeners like adults who can think for themselves.
We hear from several people during the episode, from a store operator with mixed feelings about payday loans (Cliff Notes version: happy the product exists, thinks people out of their minds to use it), to a former store manager with one of the big chains who went from loving the industry to thinking it should be outlawed (this is Chris Browning, who I feature in my book), to an economist with a generally positive view of payday. There's also the perspective of Alex, who seems to genuinely want to explore the question of whether those in the payday business are predators or financial angels serving the country’s great hard-working masses.
One quibble, though. Partway through, Alex describes a payday loan as essentially a product for people who are bad at handling money. True enough - except I think about the typical payday customer. She has a couple of kids and tries to make do on $25,000 or $30,000 a year. So it's not that people are gambling with their money, like the customer Chris Browning tells us about, but making ends on that kind of money means constantly struggling to make ends meet. “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness,” the fictional character Wilkins Micawber tells a young David Copperfield. “Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” These are people living on the edge –and an option like payday, while expensive, is so easy and so convenient.
With that said, I wish all journalism was this good.
UPDATE: Justin King at The Ladder, a blog sponsored by the New America Foundation and its asset building program, wrote this about the Planet Money episode: " 'Inside a Payday Loan Shop' is 25 minutes of really interesting, smart discussion about the payday loan business." I don't know Justin but he kindly writes about my part of the broadcast, "If his commentary here is reflective of the book, it should make for a really fascinating read. Something to look forward to in the coming months."