Recently, headlines across the country told of a modern-day loan shark by the name of Jonathan Braun who had received a pardoned in President Trump’s last day in office.

It seems that, while free on bail after pleading guilty to drug charges but before reporting to prison, he became involved in a new enterprise, helping run an operation that made loans to small-business owners at exorbitantly high interest rates and routinely threatened people who had trouble repaying. The threats were said to have included the likes of “I know where you live,” “I will take your daughters from you,” and “Be thankful you’re not in New York, because your family would find you floating in the Hudson.”

For many readers, what is probably most shocking about this story is not the pardon but the fact that there would even be an opportunity for a loan shark like Braun to exist. Yet when people become desperate and good credit alternatives are not available, people like Braun continue thrive and profit. Indeed, this episode underscores the need for options for people in varying degrees of creditworthiness and in nontraditional financial circumstances.

The need for consumer credit alternatives and the attraction towards loan sharks like Braun are probably greater than many people recognize: 42 percent of people have non-prime credit scores and are ineligible for traditional credit products. One in 10 adults struggles to pay bills because of monthly changes in income. Two-thirds of Americans in a recent survey say they are living paycheck to paycheck, and 82 percent admit they could not cover an unexpected expense of $500. Consequently, about 15 million Americans use small-dollar loans each year.

Thus, it is critical that lawmakers carefully consider the long-term unintended consequences of measures that are designed to help. One worrisome example is the notion that we can help the underbanked by taking “unaffordable” alternative credit options, like small-dollar loans, away from them. This would do more harm than good, isolate millions of already struggling Americans, and push even more towards shady alternatives like Jonathan Braun’s operation.

President Biden has nominated Rohit Chopra to be the next director of the Consumer Financial Protection Bureau (CFPB). He is expected to take an aggressive stance on some specific economic issues, including short-term, small-dollar loans, non-bank lending, and fintech. At the same time, Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez have suggested a 15 percent interest rate cap on these credit products. U.S. Reps. Glenn Grothman (R-Wisconsin) and Jesus “Chuy” Garcia (D-Illinois) have supported a 36 percent interest rate cap.

Thus, these policymakers might seek to limit the products that small-dollar lenders can offer, the fees and interest they can charge, and where and how they can operate. The goal seems noble—protecting consumers from unreasonable indebtedness—yet these opinions don’t reflect the government’s own research on the cost of providing small-dollar credit or the realities of how COVID-19 has damaged the economy.

There are currently many popular loan products that carry annual percentage rates (APRs) greater than 36 percent, and because of this, rate caps would harm consumers who are already on the fringe of the banking system. Without these options, many people in desperate circumstances might consider taking on altogether unregulated credit.

Lawmakers must ensure that financial regulations are based on data and good policy, not just ideas that are politically popular, and they must commit to understanding and mitigating the impacts to underbanked Americans so that we don’t have to hear shocking stories about loan sharks physically threatening credit consumers in despair.