When discussions turn to curbing payday loans, I often wonder about the prospect of an increase in black market lending. Simply banning high-interest loans won’t eliminate risky borrowers’ need for short-term credit, and that need has historically been met by unsavory characters. Italian banks have recently become extremely reluctant to make loans (for reasons that are perhaps obvious and that have nothing to do with restrictions on high-interest loans, etc.), and the Mafia has stepped into the breach.
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About the Author
Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.
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