Jonathan Freedland that is.
Yes, let\’s bring back the anti-usury laws.
In the US last year, 1.2 million people filed for bankruptcy, hardly a surprise in a society where consumer debt has increased by 733% since 1980.That year is significant. Until then, anti-usury laws were still on the US statute book, as they had been since 1776, capping the amount lenders could charge.
Might have been worth mentioning that inflation had meant that real interest rates were negative, driving the entire US Savings and Loan industry (the Building Societies, essentially) into bankruptcy, no?
Now, nearly 300 years later, it\’s surely time to put the cap back on. It can\’t be too much to ask that banks which currently borrow from the Bank of England at a rate of 0.5% lend it out at no more than 8%: they\’d still be charging customers 16 times more for money than they had paid for it.
Err, there\’s a few things that need to be added into that calculation. The overheads of the banks of course, all those lovely buildings and people have to be paid for somehow. Plus the costs of making the decision to lend: and the costs of getting the money back. Plus we need to add the default rate into it and of course inflation.
Erm, no, fixing the maximum interest rate at 8% is an extremely silly idea indeed. Barking mad in fact.