The left and right have converged on the premise that some prices are inherently wrong.
Nowhere is the horseshoe theory more readily apparent than in consumer finance.
J ean-Pierre Faye died this past March at age 100. He lived long enough to witness most political arrangements of the last century rise and (often) fall, leaving behind a gripping metaphor. In a 1972 work, he drew a map of the German parties of 1932 as a horseshoe: Communists at one tip, National Socialists at the other. The two ends curved inward until more iron separated them from the center than the gap of air that kept them apart.
The imagery flattened into a cheap trick, typically deployed by partisan operatives calling their opponents “fascists” and “communists” in the word-limited confines of a politically charged letter to the editor. Political scientists circled the metaphor like vultures, picking it apart in the last decades of Faye’s life. Still, they made a good point: The far left and the far right have genuinely different ideal worlds. Pretending otherwise is lunacy.
But every now and again, the ends really do meet. When they do, what they share is a premise above all else.
Nowhere is it more readily apparent than in consumer finance. Senators Bernie Sanders and Josh Hawley jointly introduced a bill in February 2025 to amend the Truth in Lending Act; their bill would cap credit-card interest at 10 percent for five years. Representatives Alexandria Ocasio-Cortez and Anna Paulina Luna followed suit, announcing their companion bill in the House. Someone online quipped that Luna and Ocasio-Cortez make strange bedfellows. In reply, Luna argued that it wasn’t strange at all. According to her, most people agree that high credit-card rates are predatory.
Luna may be right about where popular sentiment lies. If she is, the question has become whether a price (in this case, the price of credit-card debt) is or is not “fair” (a matter of moral judgment), rather than an economic signal. Sanders and Hawley are in the former camp. So are Luna and Ocasio-Cortez. So is the president.
In early January of this year, President Trump called for a one-year cap of 10 percent on credit-card interest rates. The effective date of his proclamation was to be January 20. He said that lenders who defied him would be “in violation of the law.” What law? Several large banking institutions, including JP Morgan Chase, responded by signaling a refusal to comply.
Senator Elizabeth Warren declared that begging lenders to comply with a presidential demand is a “joke.” If Trump wanted a cap, Congress could pass one. With respect to the machinery of Congress, Warren wasn’t wrong. Trump’s proclamation went nowhere, while the bills eventually died.
Then something strange happened. The effort remobilized.
In August, Senator Elizabeth Warren hailed the chiefs of the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve. She urged them to reject Opportunity Financial’s $130 million bid to acquire BNC National Bank. Warren’s primary objection is OppFi’s pricing: up to 195 percent APR, paired with 55 percent charge-offs. Earlier in July, the self-described “non-partisan” National Consumer Law Center pressured regulators, filing comments on behalf of more than 100 clients and groups with a simple demand: Reject the deal.
I present the horseshoe. The left and the right have converged on the premise that some prices are inherently wrong. Political actors turned to forcing judgment into law through regulatory discretion. As we all know, discretion is the better part of valor.
The economics on this matter are settled and boring. In December, economists at the New York Fed published findings from Illinois and both Dakotas, all of which adopted 36 percent price ceilings. At first, it seemed like good news. For borrowers in the lowest FICO-equivalent decile, balances fell by roughly $2,000. Then, reality hit: Delinquencies among those borrowers stagnated, while credit reallocated upward to higher-scoring demographics. It became abundantly clear that the riskiest had been rationed out.
The arithmetic is also settled and boring, but it explains why. Federal Reserve researchers studied lending costs and found that a loan must be at least $2,530 to break even. Below that threshold, the annual percentage rate looks unconscionable. If I borrowed $100 from you, the reader, and paid you back $107 in exactly one week, the APR on that loan would equal 365 percent. But it’s only $7 in simple interest. On their latest quarterly report with additional insights from their 2025 10-K form, OppFi’s average new borrower loan is roughly $1,950 over a contractural term of about eleven months, with many borrowers refinancing at the 4 month mark. That is a loan too small to be made at 36 percent by non-specialty lenders hoping for the product to be anything other than a loss leader.
It doesn’t matter. The Truth in Lending Act today mandates that a loan with a term of months be advertised in years, producing an apocalyptic number that reads like an indictment. Warren adopted the interpretation in 2007 and has argued it ever since: Credit should be regulated like a defective toaster. Her unmistakable framing persists.
The scaffolding dates back to 1916. Concluding that legal lending had to be profitable or illegal lending would flourish, the Russell Sage Foundation proposed the Uniform Small Loan Law. Under the provisions of this model law, lenders were allowed to charge 42 percent annually. This eventually coalesced into the 36 percent rate cap proliferating today. Critics decried the rate as extortionate and accused Russell Sage of an unholy alliance with lenders.
In 1929, four states reduced the maximum rates allowed under their small-loan law derivatives. In Missouri, surviving lenders largely abandoned loans of $100 or less. Congress attacked the problem differently in 1968. The Truth in Lending Act required lenders to disclose what credit cost, standardized as an annual percentage rate. The metric now serves as charm pricing for long-term debt obligations and the opposite for everything else.
Which brings us back to the final irony. Warren wants regulators to block OppFi, even though approval would bring OppFi inside the Federal Reserve’s consolidated supervisory perimeter. The direct federal supervision she doesn’t realize she wants is available through the merger transaction that she so vehemently opposes.
Regulators have one mandate: Assess whether the parties to a merger meet the statutory factors necessary for approval. Absent from these considerations is the evaluation of a moral imperative. Congress never implemented a free-standing interest-rate veto within the merger-review process. If 195 percent ought to be made illegal, four members of Congress spanning the entire spectrum of the horseshoe have the draft. Let them pass it. Later, they can answer to the borrowers who are left without any credit at all.