I write in BROKE, USA about the poverty business morphing into an industry. It used to be the owners of the corner pawnshop might have gotten Cadillac-rich extending short-term credit to the working poor. Today, though, there’s Cash America, one of three publicly-traded companies in the pawn trade. Cash America operates a chain of 600 pawnshops that booked pre-tax profits of $150 million in 2009, charging interest rates of between 60 percent and 300 percent a year loaning money to its customers.
There are six publicly-traded companies in the check cashing business. And that doesn’t include ACE Cash Express, the country’s largest check casher, which went public in the early 1990s but reverted to private ownership in 2006, when senior management teamed up with a private equity firm to buy the company for $420 million in 2006. There are a half-dozen publicly-traded corporations in the payday advance business but, like with check cashing, that only tells part of the story. Two of payday’s bigger companies, Check ‘n Go and Check Into Cash, each with around 1,200 stores apiece, are privately held. Each generates roughly $25 million a year in profits a year for its owners.
Poverty, in other words, is big business. That’s a topic I look forward to exploring in this space and in other venues, including The Huffington Post, The Big Money, and TheAtlantic.com, in the coming weeks.