Capital at its fringes

New Political Economy

Volumn 11, Issue 4, 2006, Pages 479-498

  Aitken, Rob ^a  

^a UNIVERSITY OF ALBERTA   (Canada)

Author keywords

[No Author keywords available]

Indexed keywords

CAPITAL; POLITICAL ECONOMY;

EID: 33845523136     PISSN: 13563467     EISSN: 14699923     Source Type: Journal    
DOI: 10.1080/13563460600990491     Document Type: Article

References (93)

1. Marieke de Goede, Virtue, Fortune and Faith: A Genealogy of Finance (University of Minnesota Press, 2005), p. 9.
2. See, for example, Paul Langley, '(Re)Politicizing Global Financial Governance: What's "New" about the "New International Financial Architecture"?', Global Networks, Vol. 4, No. 1 (2004), p. 71.
3. See also Susanne Soederberg, 'The Emperor's New Suit: The New International Financial Architecture as a Reinvention of the Washington Consensus', Global Governance, Vol. 7, No. 4 (2001), p. 458
4. Susanne Soederberg, 'On the Contradictions of the New International Financial Architecture: Another Procrustean Bed for Emerging Markets?', Third World Quarterly, Vol. 23, No. 4 (2002), p. 614.
5. See Eric Helleiner, 'State Power and the Regulation of Illicit Activity in Global Finance', in Peter Andreas & H. Richard Friman (eds), The Illicit Global Economy and State Power (Rowman and Littlefield, 1999), pp. 53-90
6. Susanne Soederberg, 'Unravelling Washington's Judgement Calls: The Cases of the Chilean and Malaysian Capital Controls', Antipode, Vol. 36, No. 1 (2004), pp. 43-65
7. Anthony B. von Fossen, 'Money Laundering, Global Financial Instability and Tax Havens in the Pacific Islands', The Contemporary Pacific, Vol. 15, No. 2 (2003), pp. 237-75
8. Michael Brzoska, 'Taxation of the Global Arms Trade?: An Overview of the Issues', Kyklos, Vol. 57, No. 2 (2004), pp. 149-72.
9. This article focuses on the role of fringe finance in, or as it emanates from, 'advanced liberal' countries and, in particular, the countries of the Anglo-American world. Although important, it is beyond its scope to review the complex role of fringe finance in the developing world (beyond the examples cited). Although there are important connections between fringe finance in the developed and developing worlds - connections that are hinted at here - the role of fringe finance in the developing world occupies a unique history that is, at least in part, related to the role of micro-enterprise in development and consumer credit schemes.
10. See, for example, Dawn Burton, David Knights, Andrew Leyshon, Catrina Alferoff & Paula Signoretta, 'Making a Market: The UK Retail Financial Services Industry and the rise of the Complex Sub-Prime Credit Market', Competition and Change, Vol. 8, No. 1 (2004), pp. 3-25.
11. Paul Langley, 'The Everyday Life of Global Finance: A Neglected "Level of Governance"', in Andrew Baker, David Hudson & Richard Woodward (eds), Governing Financial Globalisation: The Political Economy of Multi-Level Governance (Routledge, 2004), pp. 85-101.
12. See also Damian Hodgson, '"Know Your Customer": Marketing, Governmentality and the "New Consumer" of Financial Services', Management Decision, Vol. 40, No. 4 (2002), pp. 318-28.
13. See Paul Langley, 'In the Eye of the "Perfect Storm": The Final Salary Pensions Crisis and Financialisation of Anglo-American Capitalism', New Political Economy, Vol. 9, No. 4 (2004), pp. 539-58
14. Paul Langley, 'The Everyday Life of Global Finance', IPEG Papers in Global Political Economy No. 5, 2003
15. Adam Harmes, 'Institutional Investors and the Reproduction of Neoliberalism', Review of International Political Economy, Vol. 5, No. 1 (1998), pp. 92-121
16. Adam Harmes, 'Mass Investment Culture', New Left Review, No. 9 (2001), pp. 103-24.
17. I have purposely inserted a solidus between inclusion and exclusion. Part of the implication of the analysis put forward in this article is that financial marginality and 'exclusion' is not necessarily the result of some pristine disconnection from or withdrawal of financial services. Rather, mainstream financial institutions are deeply implicated in the kinds of 'fringe' practices that generate financial marginality, inequality and poverty across the Anglo-American world. Inclusion and exclusion, in this vein, are not neatly separate or the opposite of each other, but a shared field.
18. Kenneth Temkin & Noah Sawyer, Analysis of Alternative Financial Service Providers (Fannie Mae Foundation, 2004), p. 8.
19. Nikitra S. Bailey, 'Predatory Lending: The New Face of Economic Injustice', Human Rights, Vol. 32, No. 3 (2005), p. 14.
20. Michael S. Barr, 'Banking the Poor', Yale Journal of Regulation, Vol. 21, No. 121 (2004), p. 150.
21. Susan Lott & Michael Grant, Fringe Lending and 'Alternative' Lending: The Consumer Experience (Public Interest Advocacy Centre, 2002), p. 5.
22. Diane Hellwig, 'Exposing the Loansharks in Sheep's Clothing: Why Re-regulating the Consumer Loan Market Makes Economic Sense', Notre Dame Law Review, Vol. 80, No. 4 (2005), pp. 1570-74.
23. See Uriah King, Wei Li, Delvin Davis & Keith Ernst, Race Matters: The Concentration of Payday Lenders in African American Neighbourhoods in North Carolina (Center for Responsible Lending, 2005), p. 12, and Temkin & Sawyer, Analysis of Alternative Financial Service Providers, pp. 11-5.
24. See also James H. Carr & Jenny Schuetz, Financial Services in Distressed Communities: Framing the Issue, Finding Solutions (Fannie Mae Foundation, 2001) and Stratcom Strategic Communications/Association of Community Organizations for Reform Now, Survey of Payday Loan Users in Toronto and Vancouver (Stratcom/ACORN, 2005).
25. See Dollar Financial Corporation, Form 10-K: Dollar Financial Corp-DLLR (Annual Report) (Dollar Financial Group, 2005), p. 3.
26. Ibid., p. 32.
27. First Cash Financial Services Inc., 2004 Annual Report (First Cash Financial Services, 2004), pp. 1-5.
28. Ibid., p. 2.
29. Provident Financial PLC, Annual Reports and Accounts 2004 (Provident Financial PLC, 2005), p. 20
30. Ibid.
31. 'Having proved conclusively that the home credit model can be transferred successfully overseas', Provident's Chairman notes, 'we continue to research new markets.' See Provident Financial PLC, Annual Reports and Accounts 2004, p. 25.
32. Cash Now LLC, International Cash Now Synopsis (Cash Now LLC, 2005), pp. 18-9. The cost of the turnkey package is $102,500 (CDN).
33. Ibid., p. 26. Its Rent Cash option, in addition, provides capital to locations - both licensed agents and independent operators - to a level that roughly equals half of its issued credit.
34. Henry Palmer (with Pat Conaty), Profiting From Poverty: Why Debt is Big Business in Britain (New Economics Foundation, 2002), p. 14.
35. Dollar Financial Corp., Form 10-K, p. 40.
36. See Cattles PLC, Annual Report and Accounts 2004 (Cattles plc, 2005), p. 22 and Provident Financial PLC, Annual Reports and Accounts 2004, p. 45.
37. Palmer, Profiting From Poverty, 17.
38. Jean Ann Fox & Anna Petrini, Internet Payday Lending (Consumer Federation of America, 2004), p. 6.
39. Advance USA website, http://usadvance.com (accessed 20 October 2005).
40. Fox & Petrini, Internet Payday Lending, p. 13. See also a related discussion regarding the 'complex subprime' credit market in Burton et al., 'Making a Market', p. 3-25.
41. Noted in Consumer Federation of America, Rent-A-Bank Payday Lending: How Banks Help Payday Lenders Evade State Consumer Protections (Consumer Federation of America/U.S. Public Interest Research Group, 2001).
42. On governmentality, see Mitchell Dean, Governmentality: Power and Rule in Modern Society (Sage, 1999)
43. Michel Foucault, 'Governmentality', in Graham Burchill, Colin Gordon & Peter Miller (eds), The Foucault Effect: Studies in Governmentality (Harverster Wheatsheaf, 1991), pp. 87-104
44. Nikolas Rose, Powers of Freedom: Reframing Political Thought (Cambridge University Press, 1999).
45. See Rob Aitken, '"The Democratic Method of Obtaining Capital": Culture, Governmentality and Ethics of Mass Investment', Consumption, Markets and Culture, Vol. 6, No. 4 (2003), pp. 293-317.
46. Hodgson, '"Know Your Customer"', p. 326.
47. Langley, The Everyday Life of Global Finance, p. 7.
48. Policy Research Initiative/Social and Enterprise Development Innovations, Financial Capability and Poverty (PRI/SEDI, 2004), p. 6.
49. For a British example, see Financial Services Authority, Building Financial Capability in the U.K. (Financial Services Authority, 2004).
50. David Knights, 'Writing Organizational Analysis into Foucault', Organization, Vol. 9, No. 2 (2002), p. 579.
51. This is not to suggest that savings/investing schemes do not, in their own way, require forms of self-discipline and coercion. The recent popularity of asset-accumulation savings schemes for the poor, for example, are deeply reliant on coercive techniques.
52. See Lott & Grant, Fringe Lending, p. 9.
53. For a discussion of the 'immediate' nature of fringe finance, see Claire Whyley & Steve Brooker, Home Credit: An Investigation Into the UK Home Credit Market (The National Consumer Council, 2004): 'the home collection element of the service and the collector-customer relationship often means this loan is paid off ahead of other commitments', p. 65.
54. Creola Johnson, 'Payday Loans: Shrewd Business or Predatory Lending?', Minnesota Law Review, Vol. 87, No. 1 (2002), p. 78.
55. Michael S. Barr, Banking the Poor: Policies to Bring Low-Income Americans into the Financial Mainstream, Research Brief, The Brookings Institution, 2004, p. 2.
56. Whyley & Brooker, Home Credit, p. 64.
57. Keith Ernst, John Farris & Uriah King, Quantifying the Economic Cost of Predatory Payday Lending (Center for Responsible Lending, 2004), p. 3.
58. Mark Flannery & Katherine Samolyk, Payday Lending: Do the Costs Justify the Price?, Working Paper No. 2005-09, FDIC Center for Financial Research, p. 19.
59. Ibid., p. 20.
60. Ernst and Young, The Cost of Providing Payday Loans in Canada (Ernst and Young Tax Services Group, 2004), p. 29.
61. Ibid., p. 39. A slightly different version of this short-term cost story is presented by Ace Cash Express Inc., a leading provider of fringe finance.
62. See Ace Cash Express Inc., The Evolving Needs of US Consumers: A Status Report from Ace Case Express (Ace Cash Express Inc., 2005): 'A payday loan, by definition, is short-term, unlike a mortgage, a car loan or a credit card balance that is carried over a long period of time. It can be equated to a taxicab ride. Taxis are very expensive and inefficient to use for everyday or lengthy travel and if one were to calculate the cost-per-mile of traveling by taxis versus the cost of buying or renting a car it would clearly come out much higher. But taxis - just like payday loans - are useful and very efficient for occasional, short-distance needs. They both offer considerable convenience, accessibility and immediate assistance in getting from one point to the next' (p. 7).
63. Ernst et al., Quantifying the Economic Cost, p. 2.
64. Hellwig, 'Exposing the Loansharks', p. 1576.
65. Ernst and Young, The Cost of Payday Loans, p. 36.
66. Hellwig, 'Exposing the Loansharks', p. 1576.
67. Ernst and Young, The Cost of Payday Loans, p. 36.
68. Shelia Bair, Low Cost Payday Loans: Opportunities and Obstacles (Isenberg School or Management, University of Massachusetts/Annie E. Casey Foundation, 2005), p. 38.
69. Conversation with Bob Whitelaw, CEO, Canadian Payday Loan Association, 26 September 2005. See also http://www.cpla-acps.ca.
70. Palmer, Profiting from Poverty, p. 15.
71. The Canadian Payday Loan Association intends to develop an independent enforcement mechanism to implement its code of conduct, but has not yet done so.
72. Federal Deposit Insurance Company, Payday Lending Programs, Revised Examination Guidance Letter (FDIC Financial Institution Letter FIL-14-2005).
73. Advance America the largest American provider of payday cash advances recorded profits of US$166 million in 2004. See Advance America Cash Advance Centers Inc., Form 10-K, Annual Report 2004 (Advance America Cash Advance Centers Inc., 2004), p. 34. Dollar Financial reported revenues in 2004 of US$246 million. See Dollar Financial Corp., Form 10-K, p. 35. Ace Cash Express earned a total of US$17.1 million in net income in 2004.
74. See Ace Cash Express, Annual Report 2004 (Ace Cash Express, Inc., 2004), p. 3.
75. Bair, Low-Cost Payday Loans, p. 10.
76. Jacqueline Duby, Eric Halperin & Lisa James, High Cost and Hidden From View: The $10 Billion Overdraft Protection Market, Center for Responsible Lending Issue Paper No. 9, 2005, pp. 4-5.
77. Temkin & Sawyer, Analysis of Alternative Financial Services, p. 1.
78. Elizabeth R. Schiltz, 'The Amazing, Elastic, Ever-Expanding Exportation Doctrine and Its Impact on Predatory Lending Regulation', Minnesota Law Review, Vol. 88, No. 518 (2004), p. 522.
79. Jean Ann Fox, Unsafe and Unsound: Payday Lenders Hide Behind FDIC Bank Charters to Peddle Usury (Consumer Federation of America, 2004), p. 14.
80. Ace Cash Express, Annual Report 2004, p. 35.
81. Dollar Financial Corp., Form 10-K, p. 40.
82. First Cash Financial Services Inc., 2004 Annual Report, p. 21.
83. London Scottish Bank plc, Report of the Directors and Statement of Accounts (London Scottish Bank PLC, 2004), p. 46.
84. Ace Cash Express, Annual Report 2004, p. 37.
85. Dollar Financial Corp., Form 10-K, p. 39.
86. See Provident Financial PLC, Annual Reports and Accounts 2004, p. 45.
87. Cattles PLC, Annual Report, p. 22.
88. Barr, Banking the Poor, p. 7.
89. Fox & Petrini, Internet Lending, p. 17.
90. See Susanne Soederberg, 'The Promotion of "Anglo-American" Corporate Governance in the South: Who Benefits form the new International Standard?', Third World Quarterly, Vol. 24, No. 1 (2003), pp. 7-27.
91. James H. Carr, Financial Services in Distressed Communities: Issues and Answers (Fannie Mae Foundation, 2001), p. 3.
92. See Jabrina Robinson, Alternatives to Payday Lending: Moving Away from an Abusive Product (Center for Responsible Lending, 2005). See also the Association of Community Organizations for Reform Now, Runaway Stagecoach: Racial and Economic Inequality in Wells Fargo's Subprime Lending (Acorn, 2004).
93. See, for example, Jerry Buckland & Thibault Martin with Nancy Barbour, Amelia Curran, Rana McDonald & Brendan Reimer, The Rise of Fringe Financial Services in Winnipeg's North End: Current Experiences, Firm Legitimacy and Community-Based Alternatives (Winnipeg Inner-City Research Alliance, 2003). Rob Aitken