S.J. Quinney College of Law Professor Chris Peterson was interviewed in the May 2016 issue of The Atlantic in a story titled, “Payday Lending: Will Anything Better Replace It? The practice is slowly being regulated out of existence. But it’s unclear where low-income Americans will find short-term loans instead.”
The idea that interest rates should have limits goes back to the beginning of civilization. Even before money was invented, the early Babylonians set a ceiling on how much grain could be paid in interest, according to Christopher Peterson, a law professor at the University of Utah and a senior adviser at the Consumer Financial Protection Bureau: They recognized the pernicious effects of trapping a family with debt that could not be paid back. In the United States, early, illegal payday-like loans trapped many borrowers, and harassment by lenders awoke the ire of progressives. States began to pass versions of the Uniform Small Loan Law, drafted in 1916 under the supervision of Arthur Ham, the first director of the Russell Sage Foundation’s Department of Remedial Loans.