In a letter to the Wall Street Journal, Prof. Roger Meiners defends payday loans. He explains how a 36% APR cap would ruin the industry by making it unprofitable to operate a payday loan shop.

But perhaps his best observation was about predatory lending. Many critics refer to payday loans as an example of predatory lending. Their only evidence is the 400% APR associated with them. This of course ignores that these loans only accrue interest for around 15 days, not a year.

The average amount a borrower pays in fees on a loan that is repaid on time is 15%. If that is predatory, look at a borrower who gets a mortgage on their house. By the time they have paid off their loan in 30 years, they paid around 150% of the loan amount in interest. Remind me why payday lenders are the loan sharks again?

Speaking of loan sharks, these guys are real. They were called the mafia. Desperate people used to come to them begging for money to get by. The mafia would give them the $500 they asked for, but require them to pay back twice that amount in the time allotted or else.

Why do I bring that up? Because banning and prohibiting payday lending will give rise to these criminals again. There is money to be made in small, short-term lending. If the government won't allow people to make money doing it legally, then you better believe a bunch of people are going to start doing it illegally, just like the mafia did.

If we cutoff access to short-term credit, especially for the poor and those with bad credit, then how will these people find help when they need it? Banks won't lend to them because their credit is too low. Credit Unions are the same way. Desperate people do desperate things, so it's not unlikely that these people will turn to the real loan sharks.

Is that what we really want to happen? Do we want to kill payday loans so that illegal lenders can being their operations? Plenty of liberal whackos in this country do. But then again, it's really not the liberal way to contemplate the consequences of our actions. Better to just do what seems like a good idea based on shady information.

Payday loans don't need regulating or prohibiting. The industry is self regulating, There are no lenders left who charge upwards of 600% APR. The only ones left are around 400% APR. This is obviously not a rip off as shown earlier, so leave payday loans alone.