The spreading subprime-loan debacle has emboldened some state governments to move aggressively against "payday lenders," outfits that offer high-interest-rate loans to cash-strapped borrowers who pledge to repay them when their next check arrives.
As subprime mortgages continue to demonstrate the damage to borrowers and the economy when risky loans are made to sometimes unsophisticated consumers, politicians who once steered clear of limiting the availability of credit now find "fair lending" laws that cap interest rates more palatable.
Passing legislation making it difficult for desperate people to borrow money does not put money in their hands. It simply means the desperate will have to seek alternate sources of funding from the John Gotti's, whose one identifiable trait is their collection methods.
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