Legal Commentary

Pawnshops Becoming More Respectable

By Todd Zywicki

Pawnshops have grown rapidly during the credit crunch and have started lending further up the income ladder from their traditional base?and will continue to grow I expect as regulation of credit cards and interchange fees drives more people out of mainstream financial institutions:

Pawnshop respectability surged when the economy faltered, noted the National Pawnbrokers Association?s Murphy. He says pawnshops serve the middle class who were cut off from credit, as well as the millions of Americans who don?t bank and have no checking or savings accounts. Murphy says pawnshops also reported during the downturn that restaurant owners were trading in jewelry to make their payroll.

Pawnshop and quick-loan centers fill a market niche because most community and regional banks view working-class clients as risky borrowers and don?t want to deal with small loans. Coffey sees these pawn chains continuing to grow, since banks likely won?t encroach on their territory.

I hadn?t heard the phrase ?quick-loan centers? before but I take it that?s a new euphemism for payday loans (like ?fast food? is now supposedly ?quick serve? food).

Full post as published by The Volokh Conspiracy on February 03, 2011 (boomark / email).