In the blog he writes for the Huffington Post, CASBS fellow Louis Hyman published a piece on October 2 that advocates for protecting the working poor from predatory lending practices, some of which result in effective interest rates above 300 percent.
He pushes regulators to allow banks to put so-called “payday lenders” out of business. In building his case, Hyman draws upon his expertise as a business and labor historian, noting that during the Great Depression the federal government encouraged banks, through a system of loan guarantees, to make small personal loans that brought down borrowing costs. He argues that we should learn from this model and make it easier for banks to lend to the working poor.
“Banks, in this way, could compete payday lenders out of business,” writes Hyman. "Regulation is not only about saying no, but helping institutions say yes to innovation.”
Hyman is associate professor of history at Cornell University.
