Lagged reserve accounting and the Fed's new operating procedure
Regulations designed to prevent usury, or the
taking of "excessive" interest, have been
debated from the time of Moses. Today, as a
result of a prolonged period of high inflation,
record interest rates, and sluggish economic
growth, the usury ceilings in effect in many
states are the center of controversy. Are the
critics of these usury ceilings simply speaking
out of self-interest when they argue that
interest rate ceilings work to consumers' disadvantage
by restricting credit flows and distorting
financial markets? Do usury ceilings
protect consumers from abusive lending
practices and enable them to obtain loans at
reasonable rates, as their advocates claim?