Additionally, there needs to be a return to implementing usury ceilings
applicable to credit card interest rates that average a near across-the-board rate of twenty percent and above.
They began to move operations to states with no usury ceilings
and export the higher rates allowed in those states to low-ceiling states.
That the states might also be protecting incumbent banks and increasing their market power has been a bit of political schizophrenia that sometimes has been ignored and other times has been legislatively "solved" by imposing usury ceilings
and other limitations on banks' prices and imposing "must serve" requirements on them(12) (which have also often been imposed even when the banks do not possess market power).(13)
Suppose lenders increase their use of nonprice rationing because exogenous factors - e.g., usury ceilings
or credible threats of more stringent regulation - effectively prevent them from rationing by price.
But as market interest rates fluctuated and rose sharply in the late 1970s with inflation, the profit margin based on the fixed rate became thin as usury ceilings
prevented S&Ls from charging profitable mortgage rates.
Subsequently, many states passed what are known as usury ceilings
, usually on consumer and mortgage loans, to protect the economically disadvantaged from unreasonably high interest rates.