{"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 [&hellip;]<\/p>\n","protected":false},"author":9707,"featured_media":0,"parent":1367,"menu_order":34,"comment_status":"closed","ping_status":"closed","template":"abstract.php","meta":{"_acf_changed":false,"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_tribe_ticket_capacity":"0","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":"","_tec_slr_enabled":"","_tec_slr_layout":""},"class_list":["post-1385","page","type-page","status-publish","hentry"],"acf":[],"ticketed":false,"_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}]}}