{"id":1385,"date":"2024-03-24T19:01:27","date_gmt":"2024-03-24T23:01:27","guid":{"rendered":"https:\/\/www.law.georgetown.edu\/poverty-journal\/in-print\/volume-31-issue-ii-spring-2024\/lending-experimentalism-a-new-regulatory-approach-to-payday-loans\/"},"modified":"2026-02-09T09:09:42","modified_gmt":"2026-02-09T14:09:42","slug":"lending-experimentalism-a-new-regulatory-approach-to-payday-loans","status":"publish","type":"page","link":"https:\/\/www.law.georgetown.edu\/poverty-journal\/in-print\/volume-31-issue-ii-winter-2024\/lending-experimentalism-a-new-regulatory-approach-to-payday-loans\/","title":{"rendered":"Lending Experimentalism: A New Regulatory Approach to Payday Loans"},"content":{"rendered":"<p><em><span style=\"font-weight: 400\">Payday loans entangle consumers with few alternatives in catastrophically harmful cycles of borrowing. But because of their design, payday loans are vexingly difficult to regulate effectively.<\/span><\/em><\/p>\n<p><em><span style=\"font-weight: 400\">This article explains how the structure of regulatory oversight of payday lending abets lenders\u2019 evasion. In it, I focus on how dynamism, the financial sector\u2019s ability to quickly evolve, frustrates attempts to regulate payday lending in two ways: first, lenders employ a strategy of regulatory arbitrage to escape exacting state laws. Second, lenders take advantage of product innovation\u2014what I call \u201crecharacterization\u201d \u2014 to circumvent state regulations by modifying loan attributes.<\/span><\/em><\/p>\n<p><em><span style=\"font-weight: 400\">To overcome this dynamism, I argue regulators should consider an experimentalist approach to regulation. A regulatory structure of this kind would have three components: first, regulators must adopt a broad \u201cability-to-pay\u201d standard, which centers the borrower\u2019s financial wellbeing. Second, regulators must find <\/span><\/em><em><span style=\"font-weight: 400\">partners embedded in communities to license as lenders. Finally, regulators must conduct a holistic review of borrower financial health after receiving a loan.<\/span><\/em><\/p>\n<p><a href=\"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-content\/uploads\/sites\/25\/2024\/03\/31.2-Berman.pdf\">Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Payday loans entangle consumers with few alternatives in catastrophically harmful cycles of borrowing. But because of their design, payday loans are vexingly difficult to regulate effectively. This article explains how the structure of regulatory oversight of payday lending abets lenders\u2019 evasion. In it, I focus on how dynamism, the financial sector\u2019s ability to quickly evolve, [&hellip;]<\/p>\n","protected":false},"author":9707,"featured_media":0,"parent":1367,"menu_order":2,"comment_status":"closed","ping_status":"closed","template":"abstract.php","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-1385","page","type-page","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/pages\/1385","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/users\/9707"}],"replies":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/comments?post=1385"}],"version-history":[{"count":5,"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/pages\/1385\/revisions"}],"predecessor-version":[{"id":2024,"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/pages\/1385\/revisions\/2024"}],"up":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/pages\/1367"}],"wp:attachment":[{"href":"https:\/\/www.law.georgetown.edu\/poverty-journal\/wp-json\/wp\/v2\/media?parent=1385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}