"All right, ladies, I'm feeling much calmer now. Thank you very much for your help. Here's your tip. Now please leave my office gracefully!"
Thirty minutes later, in Carter's office. Carter, sweating profusely, forcibly handed a few tens of dollars to the two female workers standing in front of him, and "politely" asked them to leave.
This indescribable profession has existed since ancient times and has never been cut off, nor is it likely to be. In a small place like Douglas, the presence of these people is inevitable, but correspondingly, market demand gives rise to market supply.
In such a tiny town, how big could the demand be? How high could the quality of these female workers be? A hole is all it takes.
But the calming effect was achieved by them in a rather unique way!
Rewind to three minutes ago, when Carter heard the knock on the door and eagerly opened it. Two heavily made-up, fishnet-wearing, at least thirty-something, over one hundred pounds white women stood before Carter, and to make matters worse, one of the women even had purple eyeshadow on.
That guy, he's just as tacky as can be. Faced with such two extraordinary "beauties," can Carter remain calm? Can he dare not to be calm?!
In the end, after spending half an hour and wasting two hundred dollars, Carter calmly sat back at his desk and summoned the strangely colored Goodman.
"Uncle Goodman, could you please bring me the current loan information for Blake Bank?"
"Why, are you finished so soon?"
Goodman responded promptly, but halfway out the door, he suddenly turned back, tentatively asking.
"Get lost!"
As if his dignity as a young man had been offended, Carter pointed angrily towards the door. And half an hour later, it was Carter's turn to look strangely at Goodman:
"Uncle Goodman, why are all the loan applicants white? With over twenty thousand black people in Douglas, don't they need loans? Are they all so wealthy?"
"Hmm? Black people? It's not that they don't come for loans, it's that they don't have anything decent to use as collateral for a loan. As for guarantors, it's not that I don't trust black people, it's just that their gang-like groups, guaranteeing for each other, could you trust them if you were in my shoes?"
Goodman took a drag from Carter's scattered cigarette, nearly choking. He couldn't believe that after reading through the loan documents for half a day, Carter would ask such a strange question.
Was this question strange?
To Carter, it seemed perfectly normal. He was genuinely curious why all the loan applicants were white, without a single black person. Even among depositors, there were very, very few black people. Among over a hundred white depositors, there were only one or two black depositors. And they all had checking accounts, not even savings accounts.
Without interest-bearing savings, no loans, Carter couldn't help but suspect that these black people were really wealthy. As mentioned earlier, due to the high inflation of the seventies, borrowing for consumption in the United States was much more profitable than normal consumption. Not borrowing is fine, okay, let's say black people don't trust banks and don't dare to borrow, but what about deposits?
Wouldn't there be interest in the bank? Even if it doesn't keep up with the inflation rate, it's still better than having no interest on the money at home, right? But these people, not borrowing and not depositing, are living like saints!
In Goodman's eyes, not lending to black people was simply a matter of course. No bank lends money to black people, and it's not a question of discrimination, it's just that with their limited wealth, what could they use as collateral?
Without collateral, and with guarantors that are untrustworthy, why should loans be given to them? If loans were given out, could they be recovered?
"Well, you make a good point. But Douglas City's black population is actually a huge potential market. What if we introduced unsecured loans specifically for black people? Because there's no collateral, we can raise the interest rate, and then—"
"Are you crazy?! Loans to black people? Unsecured loans? They won't repay, you're not giving out loans, you're giving out welfare! You should run for president and announce your plan to give out unsecured loans to black people. Those black people will vote for you!"
Carter didn't even finish his "then," and Goodman exploded. He dropped the cigarette from his mouth, forgetting about it, and excitedly pounded the table, trying to wake up this whimsical young boss.
"You're running a bank! A bank! Not a charity! No bank has ever lent money without collateral. Without collateral, forget about black people, white people won't repay either!"
"Just think about it. Suppose I, Goodman, come to borrow money now. If I mortgage my watch worth two hundred dollars to you and borrow one hundred and sixty dollars, if I don't repay the money, my two hundred dollar watch belongs to you. I lose forty dollars, but I don't want to owe, so I have to repay!"
"But now I don't have to mortgage anything. I borrowed one hundred and sixty dollars, and if I don't repay the money, my two hundred dollar watch is still mine. It's like I made three hundred and sixty dollars! So why should I repay?"
Of course, because of credit!
Carter almost blurted out, but then shut his mouth. Indeed, having seen too many unsecured loans from the future, he subconsciously thought of expanding operations with unsecured loans. But he overlooked the issue of repayment.
But since he thought of future microloans, Carter realized another brilliant idea: installment payments!
As mentioned earlier, loans in those days almost never involved installment payments. You borrow for how many years, and when the term is up, you repay the principal and interest in one go. This means that for borrowers, it's a significant pressure to come up with a large sum of money at a specific time; similarly, for lenders, banks or lending institutions, although this method facilitates fund recovery, it's not very flexible when it comes to interest rates.
After all, if you calculate the interest you have to repay in one go, divided by the principal and the term, you can easily find out the actual interest rate. However, with installment payments, especially with schemes like equal principal and interest, ninety-nine percent of borrowers actually have no idea what interest rate they're paying back.
Just take a glance and, hey, the monthly repayment seems quite manageable! So, I can totally afford it! So they recklessly borrow the money. There are many ways to manipulate this situation. For instance, if you forget to repay one time, there's a late fee, right? How much is this late fee? And how much would this late fee plus your original principal and interest amount to?
Carter himself couldn't figure out the intricacies, but just by looking at the future, where almost every platform has its own microloan business, he knew that the profits here are definitely a huge figure!
As long as the issue of repayment in this era is addressed, then this kind of microloan business is definitely another lucrative point besides the rise in the federal funds rate! And, it seems, these two can be linked together.