John Payne’s post today, “Restricting Credit for Poor People,” relates to an editorial in the Wall Street Journal from earlier this week, “Mandatory Usury in One Lesson: How Congress dictated a 79.9% interest rate.”

From the editorial:

Banks that lend money to customers with poor credit histories have to charge more to cover the extra risk. If Congress makes this impossible, banks will respond by refusing to lend to such customers, so that it will be harder for them to re-establish their creditworthiness.

Restricting poor people’s access to credit is often an unintended consequence of regulating lending. Ce qu’on ne voit pas.

Parenthetically, in the context of regulating lending, the intended consequences turn out to be very small. Ce qu’on voit. In the instance described in the WSJ editorial, the amount that a consumer would actually pay decreased only by $6. Furthermore, whether the credit card company calls it “interest rates” or “fees,” it still comes out of consumers’ pockets.