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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (208093)	10/30/2004 1:55:15 PM
From: TimF	Respond to of 1574611

That may be true in practice but I would rather have a decent supply of loans at 12% than an unlimited supply at 30%. The effect is probably not to change an large supply at 30% to a limited supply at 12%. If the rate would be 30% without the laws then you probably have 0 supply at 12%, or you have greater restrictions, and possibly fees that wind up costing more then 30%. Maybe you have a $200 application fee, or a $500 unrefundable deposit to get a relatively small loan. I'm less sure about usury laws than I am in other areas, but generally any form of price control has either very little effect (if the market price is normally within the limits of the price control or at least very close to it), or a negative effect. "Generally restrictions on price are cures that do more harm then the disease." That would be true......however usury laws are fairly generous and most lending institutions are able to make a good return on their money. If they are so generous then they may have very little effect. Their effect would probably only occur in the people with the worst credit ratings who would be price out of loans, or have to offer a lot of collateral, or pay huge fees. Alternatively its possible that the laws force the lenders to subsidize the worst risks. If so maybe they allow the worst risks to get loans at a better rate, at the cost of causing slightly worse rates or conditions or fees for everyone else. Tim