When Lenders Can Legally Provide Loans with Effective Annual Interest Rates Above 1,000 Percent, Is it Time for Congress to Consider a Federal Interest Cap on Consumer Loans?

The question of whether interest rates should be regulated for the good of society has been debated by secular and religious authorities for millennia. Restrictions on the highest rate of interest allowed by law (if any) are generally set by the states. In the U.S., whether citizens are protected against unreasonably high interest rates is generally a matter for state legislatures to decide. In this article, the current laws of the 50 states and the District of Columbia are examined with regards to the issue of usury, as well as the challenges posed by federal law for states who wish to protect their citizens against unreasonably high interest rates. Special attention is paid to payday loan providers and the way that these have used loopholes in federal law to effectively undermine state interest cap regulations. Finally, the question of whether Congressional action is needed is answered