…in this process of liberalisation over the centuries, it seems we have forgotten a couple of key principles. If I lend money, the borrower makes a promise to repay. If I lend money to borrowers I believe will probably default, I am inducing people to make promises they will break. Inducing promise-breaking is straightforwardly unethical.
Again, although short-term high-interest loans may (as Eck and Melanchthon claimed) help people through temporary difficulties without their being forced to liquidate assets (e.g. sell the family car) unnecessarily, if I lend money very short term and at high interest to someone that is already insolvent and that person defaults on other creditors shortly after repaying me, I have profited at the expense of those other creditors. That could be seen as akin to theft ”” capturing assets that should rightly be used to repay other loans.
It could be difficult to regulate lending that induces promise-breaking or that extorts the assets of other creditors without preventing more innocent lending that helps with liquidity or business launching.