by _QrE | 2025-05-11 22:13:12+00:00
> "Despite skepticism from Volcker and Buffet, financial innovation has been and will continue to be a massive net positive for humanity."

I'm not an economist by any means, but most 'financial innovation' I've seen has resulted in new regulations to rein it in and/or block it, which is not a good look for the entire sector. Strong start.

> "To free up capital, the provider bundles many $100 loans and sells them to investors for 95 cents on the dollar through securitization. This allows the provider to recycle funds into new loans, continuing to earn fees."

> "In exchange for fees, banks structure these loans and quickly move them off their balance sheets and to investors."

Even if we ignore the morality of providing predatory loans to people who can't afford to pay for groceries up front, you would think that someone making a good-faith argument would realize, upon writing stuff like the above, that no, this is not a good financial product actually.

If the author actually read some of the stuff they've linked, they'd come across stuff like this:

> "A larger proportion of interest-bearing loans will put the BNPL platforms under tighter regulatory scrutiny, since there are rules and regulations to cap interest rates and to ensure sufficient disclosures to consumers, said Stephen Biggar, director of financial services research at Argus Research."

> "Warehouse facilities tend to have the highest cost compared to other funding sources, while selling the receivables as asset-backed securities is generally cheaper but more volatile and risky, depending on investors' sentiment, Lucas said."

I'm sure the author would say that the fact that there's an appetite for this justifies the offering existing, and I'm looking forward to their next article about all the positive value that loan sharks provide, or why all the failures derived from high-risk assets falling through are perfectly fine.

> "Non-Systemic Risk (possibly famous last words but we’ll see)"

> "Do I want to see a Sports Betting BBS Index? No. Will it happen? Definitely. Sports betting does a lot of damage to the finances of American households but when the loans backing them are securitized, they will make for a great fixed income product because because gambling is a somewhat recession-resilient industry, much like other ‘sin sectors’ like alcohol and tobacco (BBS indexes for alcohol and tobacco will also happen, and around here is where I may get tired of winning)."

I hope that this entire article is a joke that flew over my head.

> "Late Fees: Miss a payment, and you’ll likely face a modest fee, often capped to keep things reasonable. Picture Alice, who forgets a $25 installment on her $100 DoorDash transaction. She’s hit with a $7 late fee, tacked onto her next payment. Annoying, but it probably won’t push her down a debt spiral."

Yes, I'm sure that tacking on a 30% late fee to a person who can't pay $25 is reasonable.

> "In Design, the principle of Universal Design focuses on creating inclusive systems and tools that improve usability for all. Autocorrect, text-to-speech readers, dark mode, and subtitles all came from Universal Design. Similarly, lending that makes credit more affordable and accessible for lower-income individuals will reduce credit costs for all borrowers."

This is such a bad-faith argument, I'm frankly surprised to see it written.

The _least_ I can say about the article is that I am unconvinced, and that I'd be happy if I never got the chance to meet the author.