Taming the Sharks: Towards a Cure for the High-Cost Credit Market (Series on Law, Politics, and Society)

Rating:
Summary: Eye-opening book
Review: This is a fascinating book. Before reading the book, I knew about check-into-cash type places and rent-to-own places and pawn shops, and I figured that they weren't financially prudent options, but I had no idea how horrendous they actually are. The book points out how these sorts of companies are violating state consumer-protection rules left and right, and how government regulations like the Truth In Lending Act do nothing to help consumers of high cost-credit.

Some of the stories are about how these companies work are incredible. For example, there's one Indiana payday loan company that offers a 7,300 percent APR loan. While Peterson doesn't go into great detail about the sad stories that result from people taking out these sorts of loans, he tells just enough stories to make you realize how evil this industry is. For example, Peterson cites a study that looked at certain neighborhoods in Boston that were targeted by high-cost mortgage firms, convincing people to refinance their mortgages in ways that they couldn't afford. As a result, in some neighborhoods 82 percent of the families lost their homes due to foreclosure.

This sort of stuff is appalling, and while I have basically libertarian sentiments, I agree with Peterson that the government needs to do something about it. What's going on right now is fraudulent, because most consumers of high-cost credit have no idea what they're getting themselves into. Peterson draws a nice analogy with informed consent in medicine - hiding terms of a medical procedure in fine print, trying to make it so the patient doesn't understand what's going on, is viewed as unacceptable. Peterson suggests that we should think the same way about the credit industry.

Overall, this is a well-written, engaging book. It's written at just the right intellectual level - this is a serious work, but the writing flows well, and it's free of academic and technical jargon. I hope this book makes people realize that something needs to be done to tame the high-cost credit industry.