by Jeff Sovern
Not that I need one, but my question is prompted by my expectation that during the Consumer Financial Protection Bureaus's field hearing today on payday lending, the Bureau will propose new restrictions on payday lending. Critics may claim that the restrictions will drive consumers to loan sharks. For a past example of such views, see Todd Zywicki's Wall Street Journal op-ed, Dodd-Frank and the Return of the Loan Shark, But here's the thing: some states, like New York, already effectively block payday lending. If restrictions on payday lending led to loan sharking, we would expect to see loan sharks operating in New York. So where are they?
I assume you’re already familiar with this historical examination of the facile loan-shark thesis, but just in case you’re not: http://scholarlycommons.law.wlu.edu/cgi/viewcontent.cgi?article=4277&context=wlulr