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Yet most of the things you list, we regulate. We control how fast people drive. We control safety devices on cars. We have food laws. We don't have to ban any of it, we just have to keep people from taking advantage of others.
Loans are regulated as well. Part of the problem was a government that strong armed banks into giving loans to minorities that the banks didn't want to give (for financial reasons). So the banks did it, but to be fair they had to apply the same standards a crossed the board. So everyone was eligible for loans they couldn't pay back and they were dumb enough to take them. Deregulation, in this case, would have made home loans safer.
To add an example to your very accurate post:Except that they deregulated the bank regulations that required banks not be involved in mortgages. The reason we ended up bailing them out, stupidly, is because the mortgage meltdown threatened the basic banking system in this country. Had they never deregulated it, had only mortgage companies been at risk of going under, we never would have thrown all that money at the banks. Further, had they regulated the industry in the first place, that the people who initially signed the loans were financially responsible for them forever thereafter, you wouldn't have had the fly-by-nights who were pushing bad paper in the first place.
Greed causes banks to NOT give loans to people who can't afford them. Are you sure that those bad loans were caused by a lack of regulation, rather than the regulations themselves?To add an example to your very accurate post:
If you recall the Saving & Loan debacle during the Regan administration the root cause was deregulation by the Pres. Regan. I lived very close to the owner of one of the S & L’s in Paradise Valley AZ. It was big local news. The government regulators were doing their job and had discovered the bad loans years before it hit the news but were prevented from taking action. Free enterprise operates the best with moderate regulation. We keep getting lessons, but dogma gets in the way of rational actions.
If a person defaults on a loan, who deserves the blame the lender or the borrower? As credit eases and lending standards go down, more and more loans are made to people with riskier credit histories. A lot of times this can lead to predatory lending practices (e.g. adjustable rate mortgages that reset at a much higher interest rate, banks pushing loans on people who can't afford them), however sometimes it is necessary for the government to ease credit conditions in order to help spur economic growth (e.g. by making it easier for people to buy a house or start a new business).
So if I take out a loan and fail to repay it, is it my fault or the bank's?
Keating Five - Wikipedia, the free encyclopediaGreed causes banks to NOT give loans to people who can't afford them. Are you sure that those bad loans were caused by a lack of regulation, rather than the regulations themselves?
Except that they deregulated the bank regulations that required banks not be involved in mortgages. The reason we ended up bailing them out, stupidly, is because the mortgage meltdown threatened the basic banking system in this country. Had they never deregulated it, had only mortgage companies been at risk of going under, we never would have thrown all that money at the banks. Further, had they regulated the industry in the first place, that the people who initially signed the loans were financially responsible for them forever thereafter, you wouldn't have had the fly-by-nights who were pushing bad paper in the first place.
Except that they deregulated the bank regulations that required banks not be involved in mortgages. The reason we ended up bailing them out, stupidly, is because the mortgage meltdown threatened the basic banking system in this country. Had they never deregulated it, had only mortgage companies been at risk of going under, we never would have thrown all that money at the banks. Further, had they regulated the industry in the first place, that the people who initially signed the loans were financially responsible for them forever thereafter, you wouldn't have had the fly-by-nights who were pushing bad paper in the first place.
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