15 hours ago
- Lenders prefer lending to poor people due to the risk premium, making debt regressive.
- Financial innovation aims to reduce risk without reducing the premium, shifting value from customers to industry.
- Subprime mortgages exemplify this with teaser rates, balloon payments, securitization, and risk shifting.
- Contract lending exploits disfavored groups like Black homeowners, truckers, and subprime auto borrowers.
- Digital technology enables cheaper repossession through lo-jack, remote immobilization, and Tesla's auto-repo features.
- DMCA 1201 criminalizes bypassing digital locks, allowing manufacturers to enforce digital arm-breakers.
- Apple uses DMCA 1201 to block repair and app sideloading, now entering leasing with device-lock software.
- Apple's new iOS allows lenders to brick devices on missed payments, extending the subprime gadget model.