If you look at the current proposal, it would peg the criminal rate of interest at 35% APR, which is 30 percentage points above the current bank rate of 5%. One problem of pegging it at 60% or 47% APR was, when that happened in the 1980s, the bank rate was actually 20% or 21%. As interest rates came down, the spread as to what was criminal became larger, so it became also impossible to charge because very few lenders really needed to get to that criminal rate.
Wouldn't it make more sense to peg the criminal rate to the bank prime, so that if it moved down or moved up...? For example, for 30 percentage points above bank prime, if it goes down to 3% then the criminal rate would be 33%, for instance.
What do you think of that type of suggestion?