The Wrong Kicks on Route 66

Tom Miller, a professor and Jack R. Lee Chair in Financial Institutions and Consumer Finance at Mississippi State University and Todd Zywicki, a University Foundation Professor of Law at George Mason University Antonin Scalia School of Law published a must-read piece in Real Clear Policy yesterday.

The piece, entitled The Wrong Kicks on Route 66 outlines the pairs’ reaction to the “Veterans and Consumers Fair Credit Act, which you can read more about here and here.

The two scholars argue that a 36 percent interest rate cap is not a “speed bump on small dollar loans,” as many supporters argue, but is instead “an abrupt ‘pavement ends’ sign for millions of Americans.”

“A primary function of credit is to smooth consumption. More than a third of households making under $50,000 experience month-to-month spikes and dips in their income,” Miller and Zywicki argue in the piece. “Small-dollar credit products help them deal with unforeseen expenses. The choice for these consumers is between using small-dollar credit products and simply going without.”

Read the entire piece at Real Clear Policy or at the Cato Institute blog, where both serve as adjunct Scholars at the Cato Institute’s Center of Monetary and Financial Inclusion.