Abusive Lending
It's big news! The federal reserve chairman is going to "crack down" on this horrible problem of "abusive mortgage lending." Then everything will be wonderful. People won't be poor any more. And it's for the children. Isn't this great?
I just have one question -- what is "abusive lending?"
If I'm hungry and borrow $10 from you so I can buy lunch at McDonalds, and I agree to pay you back $12 tomorrow, is that "abusive lending?" What if you tell me that you'll only give me the $10 if I pay you back $20? But what if I'm really hungry and have the money and WANT to pay you the $20? What if you will only give me the $10 if I pay you back $100 tomorrow -- but I REALLY want the Big Mac, and I'm willing to give you the $100 tomorrow. Is THAT "abusive lending?"
What if I own a house and am renting it to someone? What if my mortgage payments are $750 a month, but I charge them $1000 a month? Is that "abusive?" How about if they want to buy the house from me and I agree -- but still charge them $1000 a month (which they've been paying and can afford)? Does that reach the magical threshold of "abusive lending?" Or how about if I charge them $1,001?
In order for their to be ANY level called "abusive lending," there has to be a level that is "correct" lending. However, in a free economy, there absolutely can be no such thing. How much is a rock worth? It's worth whatever the person who wants the rock is willing to pay. So if there's to be a "correct" level of lending, that can only be an arbitrary number, enforced by government with guns. So much for any concept of economic freedom.
Posted by: Ogre at
01:04 PM
Comments
1
i couldn't agree more ogre... what i have been lead to understand is that there was outright fraud in the way that some of these mortgages were made... situations where the broker outright lied to the client... things like "nahh dont worry, the rate will not go up any higher than $XX.XX" things like that... and it damn sure happened a lot down in FL with those 0 down loans...
Posted by: chris at May 18, 2007 01:42 PM (rBjHa)
2
I'll bet in every one of those cases, the written contract that was signed indicated the rate could rise beyond what the person said. If the papers were wrong that were signed, we already have laws that make that illegal -- no need to "crack" down, other than to just make more laws for even more selective prosecution.
Posted by: Ogre at May 18, 2007 05:04 PM (oifEm)
3
there are already laws against people lying to you when they lend you money... but like immigration they arent enforced
Posted by: chris at May 18, 2007 06:21 PM (rBjHa)
4
So let's see -- two different places where laws are ignored, and two solutions. So, what do you do when people don't obey the law?
A. Make new laws.
B. Ignore the law.
Nation of laws my big butt.
Posted by: Ogre at May 18, 2007 06:26 PM (oifEm)
5
i become more and more convinced every day that the only real solution will eventually be to start a new country from scratch... and it frightens me because i know how bloody that would become
Posted by: chris at May 18, 2007 07:09 PM (rBjHa)
6
The tree of liberty needs watering.
Posted by: Ogre at May 18, 2007 07:51 PM (oifEm)
7
sometimes it needs to be moved to a better neighborhood too
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