I think a component of the "problem" (if one considers this to be a problem) is the low level of financial literacy of a large part of the adult population. An ecosystem of a variety of lending products is wonderful for a population of educated consumers that make smart financial decisions.

It is painful for me to watch individuals who consistently make poor financial decisions spiral into providing the payday loan industry with a large amount of revenue. But is it really more painful than watching compulsive gamblers lose their pensions on card games or video poker or speculation on regulated index futures?