The same banks that used to make—or finance—the subprime loans that sent the world economy into a nosedive are now making and financing payday loans. Now they just use TARP funds and cheap loans from the Fed.
Payday loans are still subprime loans, but the risk is built into the enormous interest rates, which average 455%. The mafia offers better interest rates. Actually, the mafia is probably just operating payday loan storefronts now. Wells Fargo in particular is knee-deep in payday loans. It directly finances a third of payday loan branches in the U.S.
In order to make those 455% loans, banks like Wells Fargo and US Bank are able to borrow money from the Federal Reserve at .5% or less. (Wait, does that mean they can really average a 454.5% profit, not counting defaults? Holy shit.)
(Video from Showdown in America.)
Citibank, U.S. Bank, Bank of America, Wells Fargo, and Pacific Capital Bancorp have been called out by the Congressional Oversight Panel for using taxpayer money to turn around and rip off taxpayers.
Essentially, taxpayers end up paying twice: once to the government, once to the banks.