Wednesday, May 20, 2009

Cracking down on loan sharks

Over at Kiwiblog, DPF takes a look at Charles Chauvel's Credit Reforms (Responsible Lending) Bill aimed at cracking down on loan sharks and irresponsible lenders. The bill basically does two things:

  • enables the Governor of the Reserve bank to set a maximum annual rate of interest for loans; and
  • requires lenders to have a reasonable belief that the borrower is able to repay the loan.

In other words: ban usury, and make banks and lenders do their jobs and actually assess people for risk, rather than lending money to people who can't possibly pay it back. It's a good start in dealing with the problem of loan sharking, though as with DPF and Gordon Campbell I have some concerns that the Reserve Bank's maximum will become a target. But the bill certainly deserves examination by a select committee. And hopefully it'll get that chance after the next ballot.

(And I'm pleased to see that suddenly a lot more people are taking an interest in member's bills... a few years of work pays off)