Proposed 15% Interest Rate Cap Could Backfire on Vulnerable Borrowers. Senators Bernie Sanders and Alexandria Ocasio-Cortez introduced the Loan Shark Prevention Act to cap consumer loan rates at 15 percent annually. While well-intentioned, economic analysis suggests the policy could eliminate access to small-dollar lending that millions of struggling households depend on. Historical precedent shows that strict interest rate caps often reduce lender supply, forcing consumers toward less regulated alternatives or informal lending markets. The proposal oversimplifies decades of usury law evolution, ignoring why states created exceptions for short-term, small-sum loans in the early twentieth century. Policymakers should consider unintended consequences before implementing broad rate restrictions.
