U.S. cracks down on microcredit

This week’s Economist (subscription necessary) reports that the federal government and 11 states have adopted restrictions on payday loans, a form of microcredit.

In one of the last acts of the Republical Congress, payday lenders were restricted to interest rates of 36% on loans to military personnel and their spouses. […]

One state, North Carolina, recently kicked out payday lenders by allowing the law that allowed money store to operate to expire. In New Mexico Governor Bill Richardson has supported a bill tightening up the relevant laws. On March 27 the Georgia House rejected for the second time a law that would have allowed payday lenders back into the state…

So it is OK to charge poor people in poor countries e.g. 45% interest for their microcredit loans, but it is not OK in the U.S.?


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