City of Debtors: A Century of Fringe Finance by Anne Fleming
The author of City of Debtors illustrates the history of predatory lending from its beginnings as small-sum lending to private citizens. The lending she writes about has been called by such names as "chattel loans," "salary loans secured by wage assignments," and "refund anticipation loans (RALs)." Today, they are all generically labeled payday loans.
The author brings formidable resources to bear on this subject. After she graduated from law school, Fleming practiced for several years at South Bronx Legal Services, which included defending homeowners in foreclosure litigation. She added academic credentials to her practice experience with a Ph.D. in legal history from the University of Pennsylvania, and a law degree from Harvard. She is now an associate professor of law at Georgetown Law Center.
City of Debtors is much more than simply an extension of her earlier research into "unconscionability" and the history of poverty and social welfare. First, her book convincingly demonstrates what is perhaps a counter-intuitive concept: Payday loans are a product of increasingly affluent times. Second, she shows that payday loans are not extended over the period of a year but over periods of weeks and months. When the rate of interest on these loans is projected into an annual rate, their already high level of credit cost is distorted. As the author herself says, "The tricky question is: What is the rate that's going to grant lenders a profit without gouging customers? And that question has been a point of disagreement between reformers and lenders...