This is a lesson the elitist reformers are determined never to learn. Or maybe the elite like creating new problems. It gives them new chances to ride to the rescue and pose as great humanitarians. Someone likened this to breaking people's kneecaps, then compassionately providing crutches.
Without regulation, wouldn't banks charge monster fees and high interest?
"Certainly they would," Zywicki said. "The problem is they can't. I've got four credit cards in my wallet. As I sit here talking to you, my credit cards are competing for my business. If one tries to rip me off, or charge me too much, I'll switch to another."
The law of unintended consequences is never more clear than in the capping of interest -- so-called usury laws. Arkansas once capped interest rates at 10 percent.
"Very few people could get a credit card in Arkansas as a result," Zywicki said.
Arkansas then became known as the pawn shop capital of America. Pawn shop interest can be 250 percent.
To Sen. Chris Dodd, President Obama and all the credit "reformers," Zywicki says this:
"In the 1960s, the second biggest revenue source of organized crime was illegal lending. Is that the world we want to go back to, where we get rid of payday lending, and we're so morally outraged that we're going to put people in the hands of the leg-breakers and the loan sharks? They charged an interest rate that was well over 1,000 percent, and their collection techniques were a lot tougher than your local pawn shops."
When will the political do-gooders realize that the most vulnerable people in society can't take any more of their kindness?