Markets can be messy, but they usually get things right if left alone. That applies to financial markets – including loans. Even high-interest, short-term loans. Well-meaning pols sometime seek to limit interest rates on loans, especially short-term, high-interest “payday loans.” While those loans are, financially, ill-advised, some people do use them to help with sudden, unexpected expenses; and a law limiting those can dry up that market.
Alaska’s state legislature is considering such a bill right now. The bill’s summary reads:
“An Act relating to loans in an amount of $25,000 or less; relating to the Nationwide Multistate Licensing System and Registry; relating to deferred deposit advances; and providing for an effective date.”
The bill proposes to set an annual percentage rate cap on all loans under $25,000, that rate being 36 percent. Now, 36 percent is…
