Witty and right
May 28, 2009 | Wisconsin | Comments (0)From a Wisconsin Law Journal blog:
When Contracts are Outlawed, Only Outlaws Will Have Contracts
May 28, 2009
Today, May 28, Rep. Gordon Hintz is proposing a new law to outlaw payday loans.
http://www.wispolitics.com/index.iml?Article=159936
That’s not what the law actually says, of course. It merely imposes a cap of 36 percent interest annually on such loans. Consider the effect, however.
A press release from Rep. Hintz notes that, if a consumer borrows $100 for two weeks, and pays $20 interest, he is being charged a whopping 525 percent interest. However, if the law goes into effect, the interest on that two-week, $100 loan would be $1.37.
Obviously, no one is going to make such loans. It would not be enough to cover even a fraction of the overhead of running the business.
525 percent is an enormously high interest rate. But if an adult decides that he would rather pay that interest than a $35 per check fee for overdrafting his checking account, or whatever other unpleasant alternatives he may have, the state has no right to prohibit him from doing so.
Rep. Hintz calls his bill the “Payday Lending Consumer Protection Act.” But only two groups of people will benefit should this bill pass: (1) the loansharks who will take the place of payday lenders; and (2) the vendors of the baseball bats that the loansharks will use to break the knees of debtors who can’t pay them back.
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