Silliness in California
March 30, 2010 | California, industry, regulation | Comments (0)This legislation to impose an interest rate cap on loans to unemployed people is counter-productive. It will simply reduce the availability of credit. From the story:
Under a new proposal, state Assemblywoman Nancy Skinner (D-Berkeley) wants to cap the interest rate on payday loans covered by unemployment checks to 36 percent.
Federal law already caps the interest rate for the military at 36 percent. This proposal is a state version aimed at extending it to California’s unemployed.
The industry points out the cap forced stores to cut back payday loans to military personnel because the rate didn’t cover their cost, and it warns the same could happen to the unemployed.
“What, in effect, you will do is limit the choices available for short-term credit in the marketplace for these consumers,” said Greg Larsen, a spokesman for the California Financial Service Providers Association.
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