Final answer:
Regulation Z's purpose is to make loan cost information available to consumer borrowers, emphasizing transparency and consumer protection. It is not about setting interest rate caps like usury laws, which can influence the dynamics of loan issuance and interest rates if set above or at market levels.
Step-by-step explanation:
The purpose of Regulation Z is to make loan cost information available to consumer borrowers. It was enacted as part of the Truth in Lending Act to provide transparency in lending practices and to protect consumers by ensuring they have all the necessary information to make informed credit decisions. While usury laws do set caps on interest rates to prevent predatory lending, Regulation Z is not concerned with establishing uniform usury laws or standardizing interest rates on consumer loans. Its focus is not on protecting the lender against default but rather on the consumer's right to understand the terms of their credit.
Considering usury laws, if a usury law limits interest rates to no more than 35%, there would be a ceiling on how much lenders can charge, but if this limit is above the market equilibrium rate, it may not impact loan amounts or interest rates paid. However, if market rates are normally lower and the cap is reached, it could lead to a decrease in the amount of loans made as lenders may not see lending as profitable under these conditions.