Short-term lending in response to the government shutdown

Gridlock in Washington over President Donald Trump’s plans to build a wall on the border with Mexico has deprived hundreds of thousands of government employees and contractors of their wages. As a result, some have turned to specialist consumer-finance companies to bridge gaps between earnings and outgoings. Shares in World Acceptance, a South Carolina-based short-term lender, are up 22 per cent since the shutdown took effect about a month ago. EZ Corp, a pawnshop operator based in Austin, Texas, is 20 per cent higher over that period. In both cases, the rises are much more than benchmarks, suggesting investors could be betting on a surge in demand to cover unexpected expenses.

…Chad Prashad, chief executive of World Acceptance, said his company was seeing demand in Texas and the south-east of the US where there were big airports employing government workers. In response to the shutdown, World Acceptance is offering cash-strapped government employees deferrals on their loans without interest or fee penalties. New customers can get up to $1,250 in a 10-month loan with 0 per cent interest and no fees.

Here is the full FT article by Nicole Bullock.


... so why is "World Acceptance" doing this ?

Is selfless charity the only possible motive?

The play is that the borrower won't be able to repay before the zero interest period ends and makes future payments at 22+% interest.

I guess that's a distinct possibility as well. I don't know the industry well enough to know if this is a good deal or a trap.

I wish that my employer would shut down for weeks and promise to pay me anyway and then have banks offer to loan me money at no interest. Nice long paid vacation at the taxpayers expense. It would be cheaper to build the wall.

I understand that they have to work or burn PTO during the deferred payment interval.

People like understand who these dealing with plus that they are having a actual
person. Tattoo Johnny has 2871 evil body art choices you r to select from.

Get up for what people today demands.

More fun to watch Trump set himself up for the mother of all caves.

Cave? If he can milk this for another 11 months he's guaranteed re-election.

They're not even [within] 100 miles [of Baghdad]. They are not in any place. They hold no place in Iraq. This is an illusion ... they are trying to sell to the others an illusion.

Trump will be impeached by then if he's lucky. His numbers are dipping. Any lower and we could start looking at prison.

"Nice long paid vacation at the taxpayers expense"

Only just over $1000 is free. For one delayed paycheck, that means your take home is $500 per week, probably $600 gross, or $30k per year. But now that its two, paychecks deferred, the loan covers $300 per week gross, or $15k. Workers earning that are contractors who will get no back pay.

Yeah, that's tough. I would go to Hawaii until the government opened again and feel so bad about that.

There's probably a bit of altruism (executives are human also).

But there's also a PR and Brand Loyalty aspect. People who need a lone after skipping a single paycheck are the same people who may need loans when they're getting regular paychecks but an unexpected expense shows up in the future.

When do you think they're going to go for that next loan now?

Doesn't depriving Federal employees of funds make them more susceptible to foreign bribes? If there's a real national security angle, this would be it.

Short term lender, A.K.A. "payday lender"?

Millions of Americans are forced to use the usurers. Eight hundred thousand pampered federal employees are experiencing a dose of the reality that millions of ordinary Americans live with.

In conclusion, Build The Wall.

Federal employees are US citizens, and Dick the Butcher and his fellow Trump supporters are consumed with hatred for them. Their hatred makes them unfit to govern.

Those "pampered" federal employees you despise are some of the ones who have built up parts of the border that desire. Your ugly contempt for the hardworking American worker is on display.

I don't hate the federal workers, at least half of them are productive, but it's contractors that actually build the wall.

Regular ol' local banks around here are advertising zero-interest loans for fed emps.

USAA Savings Bank (an active duty, military veterans has earmarked $15 million for Coast Guard families that aren't being paid. l

Also worth mentioning: federal employees, who have a non trivial influence on how and how much money the government spends and usually make above the median pay for their profession are living hand to mouth to such a degree they need to hit the pawn shop the day they miss one pay check.

Don't crap on regular Americans who work hard for their paycheck. What about the rich billionaires that buy up our politicians? When is it their turn to go to the pawn shop to make ends meet?

+1. It's ridiculous for so many of them to be so improvident, but the federal government leads by example.

Exactly. That's why we need to fire the bankrupt leader of our Federal government who knows a thing or six about bankruptcies.

Try again. The branch of government specifically vested with the power of the purse is not the executive and that branch created our entitlement pyramid schemes.

OK Anon 7 how many of those bills were overrides of Presidential vetoes?

Interesting that people in Texas and the South have to resort to payday loans to make ends meet. Why are people in these Red States having such a hard time? What's the point of lower taxes, less regulations, and lower cost of living if you need loan sharks to make ends meet? Freedom, red state style, looks pretty expensive.

The many "title loan" places in Columbus Ga. -- near a big military base -- has always struck me

So that is it: the moneychangers are in action eating like locusts their brothers' substance.

Trump is using the shutdown to distract Americans from his issues and insecurities. The media is playing along (like this article) but only to get their numbers up. Trump's House of Cards is looking more like Trump Entertainment Resorts. Bankrupt.

I hate to say it -- being in the 1% (minimum net worth greater than $10M)-- but the top 20% pay 87% of the taxes. Hence the remaining riff-raff--if that's the right word--add almost no value to paying the Fed budget. Let's do the math: 87% of $4.4T of Federal spending (2018) = $3.8T is paid for by 30% of 138M taxpayers = 41M 'hard' taxpayers. Divide 3.8T/41M = $92.7k/taxpayer. Divide that by the 22% for the marginal Fed tax rate, and you get $92.7/0.22 = $421k income received by the top 30% (average), which is about TC's estimated base salary.

So, at the margin, people like TC and rich folk like me are paying for 90% of the US Federal government budget, which includes the salary of the often ZMP workers that work there. You're welcome. Now get back to work after you enjoy your Martin Luther King Jan. 21 holiday.

Typo: 30% should read 20%, the math is otherwise right. The top 20% not 30% pay for 87% of US government federal spending in 2018. The math is right in the original post.

Oh, shucks, the math was wrong. Corrected: Top 20% pay 87% of US Fed govt budget so 138*0.2 = 27.6M taxpayers in top 20%, divide $3.8T/27.6M = $137.7k/taxpayer (top 20%). Divide this amount by 22% (ignoring capital gains) and you get roughly $625k 'income' for these top 20%, on average. The mean would be much greater than the median, so likely the 0.1% and the 1% are paying for much of the Federal government. Since the top 1% own about 50% of the wealth in the USA, this makes sense. I think the above is correct now.

No wonder you can't find work. ;)

More banking, new entrants, more adaptable economy. The predatory lender gets new customers, expands his base. The betting is that the government workers mostly get their jobs back, a risk. I am still at positive on the government shutdown, bit more self reliance is being learned daily..

I did not have a position on the US Govt. Lockdown and being from India i am not really concerned either.
But I am more than surprised that after missing *one* pay cheque (do Americans get paid every month or every week?) Federal govt. employees are queuing up for loans to make ends meet.
How badly paid are these guys? Or is it irrational spending and lack of a saving habit?
Just can't understand this 'problem'.

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