Posted on 10/20/2014 10:18:08 AM PDT by jazusamo
The New York Times is again on the warpath against what it calls "predatory lending."
Just what is predatory lending? It is lending that charges a higher interest rate than people like those at the New York Times approve of. According to such thinking — or lack of thinking — the answer is to have the government set an interest rate ceiling at a level that will be acceptable to third parties like the New York Times.
People who believe in government-set price controls — whether on interest rates charged for loans, rents charged for housing or wages paid under minimum wage laws — seem to think that this is the end of the story. Yet there is a vast literature on the economic repercussions of price controls.
Whole books have been written just on the repercussions of rent control laws in countries around the world.
These repercussions include the housing shortages that almost invariably follow, the deterioration of existing housing and the shift of economic resources — both construction materials and construction labor — from building ordinary housing for the general public to building luxury housing that only the affluent and the rich can afford, because that kind of housing is usually exempted from rent control.
There is at least an equally vast literature on the repercussions of minimum wage laws. Unemployment rates over 20 percent for younger, less skilled and less experienced workers have been common, even in normal times — with much higher unemployment rates than that during recessions.
Against this background of negative repercussions from various forms of price control, in countries around the world, why would anybody imagine that price controls on interest rates would not have repercussions that need to be considered?
(Excerpt) Read more at creators.com ...
Our babies will be smart AND beautiful! BUMP!
Yes, Banks the world over go out of their way to lend their customers hard earned dollars to people who can’t pay it back. It’s a damned shame..................
I like that: The media are in many cases "predators".
No, it is making loans with "disclosed" terms the borrower cannot understand (being hidden in legalese) designed to force default and a profitable foreclosure.
I presume you are including MasterCard and Visa in your list of perpetrators?
> I like that: The media are in many cases “predators”.
I think of them more as bottomfeeders.
So rather than just have a housing crisis based on NINJA LOANS (No Income No Assets ) we’d have a whole economy based on such foolishness. Maybe the New York Times is failing because they can’t do math or think logically... and we mistakenly thought it was the internet... Sowell would know... maybe he can address the New York Times...
Actually no. I was thinking of land and emergency lenders demanding security, who are often overtly predatory.
Just what is predatory lending? It is lending that charges a higher interest rate than people like those at the New York Times approve of.
No, it is making loans with “disclosed” terms the borrower cannot understand (being hidden in legalese) designed to force default and a profitable foreclosure.
It’s like predatory parking regulations and speed enforcement...DESIGNED to cause violation.
You mean the sort of thing that Whitewater did and hired Hillary Clinton to defend them for it?
I recall reports of Cali's Northridge quake did more damage because rent control over the years made it uneconomical to replace existing buildings with newer, more earthquake resistant buildings.
mark
Yes, feeding on the foolish, the inexperienced, the weak, the lazy.
Excellent insight.
Correct. "Predation" implies unethical or even borderline illegal behavior. Sowell is writing as if there is no such thing. There always has been.
The NYT article describes high interest rates as Predatory Lending.
http://www.nytimes.com/2014/10/19/opinion/sunday/a-rate-cap-for-all-consumer-loans.html?_r=0
It seems clear that the reason Sowell is using the term that way is because, aside from one brief mention of hidden fees, the NYT uses it that way throughout the article he discusses.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
