The Florida Bar

Florida Bar Journal

City of Debtors: A Century of Fringe Finance

Book Reviews

City of Debtors coverThe 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 for a very long time.”

The depth and ingenuity of the author’s research is on display throughout her text and in her endnotes. Fleming pursued her research with a focus on how marketing small loans to lower-income people came to be regulated and maintained by law. In her pursuit of lawsuits that helped frame the regulatory framework at any given time, she reviewed contemporaneous records kept by tenements, sworn testimony in court proceedings, conference notes, interviews, and written and recorded recollections of the borrowers who sought these small loans and of the lenders that made them. She followed the same approach in seeking and reviewing contemporaneous records of legislative history behind statutes that were enacted in an effort to regulate predatory lending throughout history.

There should be no doubt that City of Debtors is required reading for an understanding of the market of today’s payday loans. Above all, it is essential to any program by which the payday lending business can most efficiently be regulated for both borrowers and lenders.

Dennis J. Wall was admitted to The Florida Bar in 1978 and elected to the American Law Institute. He authored four books, including most recently the 2019 supplements to his two volumes of Litigation and Prevention of Insurer Bad Faith (Thomson Reuters West 3d ed. 2011).