The Arkansas constitution caps allowable interest rates for lending at 17 percent. Is the effect more to protect consumers, or deprive them of desired choices? A study [Ben Lukongo and Thomas W. Miller Jr., Mercatus]
The Arkansas constitution caps allowable interest rates for lending at 17 percent. Is the effect more to protect consumers, or deprive them of desired choices? A study [Ben Lukongo and Thomas W. Miller Jr., Mercatus]
3 Comments
The assumption is that people are stupid and must be protected from their own choices. But if you need a short-term loan to prevent your car from being repossessed (and then losing your job) such a law is NOT helping.
Poor and near-poor Americans could become less dependent on payday loans, steep installment fees, and other exorbitant interest costs if they were encouraged to build up small savings in the Post Office. Commercial banks drive them away with steep minimum fees.
I would favor subsidizing this *minimum* service directly, rather than having the post-office try to imitate a bank. Political banking activity gives post-office saving a bad name in some foreign countries.
Interesting idea. Might be a way for the Post Office to save itself by becoming a “public service” bank by offering a service the commercial banks don’t want to offer like small savings accts. But I can see every commercial bank fighting it.