Payday Pundit

Jeffrey S. Zax, an economics professor at the University of Colorado at Boulder takes a different approach to the debate over payday lending.  In his letter to editor to the Denver Post, he writes, ”Payday lenders’ interest rates seem outrageous. If payday lenders are actually making unconscionable profits, why aren’t other lenders entering the market?” Mr. Zax goes on to write, ”The first legislative priority should be to examine the regulatory regime to find out why competition isn’t working. If it can be encouraged, interest rates will go down and the supply of loans will increase. If, instead, rates are capped, they’ll go down but so will loan supply. Borrowers who can still get loans will benefit, but those who can’t will wish that they were allowed to pay higher rates.”

Smart words from someone who knows economics.