Michael Thompson wrote: > There's a way around this: don't take out the loan. Or better your credit > rating/score so you don't have to get a loan at an extravagant interest > rate. I'm NOT saying deception is OK......... but if you can't understand > the fine print, you shouldn't be signing.
I honestly don't know where I stand on this. In general, I support letting the market work. Interest rates are set by the market, and it seems that if the market were working properly, interest rates on loans to people who don't have the highest credit scores would be high enough to offset the higher risk those loans entail and no more. Thus, there wouldn't be any problems, and there wouldn't be a need for this ordinance. But....there's something I can't quite put my finger on. For one thing, it's not necessarily right to think that the invisible hand is working correctly here. I think there's a reason that pretty much every major world religion has laws against usury: because there are people who will take advantage of people with less-than-stellar credit histories or sophistication about banking. They will do this for two reasons: first, because this market isn't well-developed and so there isn't as much competitive pressure. Second, and more importantly, because when you screw the little guys, they can't complain. I do think that it is wrong to send people the message that one of the best ways to improve their neighborhoods and improve their financial standing is to purchase the house that they live in, and then take from them the ability to do so by allowing subprime lenders to take advantage of them. You say that people who don't understand the fine print shouldn't be signing anything in the first place. Yes, that's correct. That's also not terribly realistic, nor do I think it is the moral thing to do. In an ideal world, our schools would be teaching economics to students so they know this stuff, but it seems like they have enough trouble with basic math and reading. Even if schools became perfect tomorrow in this regard, though, it wouldn't do much for those adults right now who don't know much about finance. To say that they shouldn't sign anything if they don't understand that is to relegate them to perpetual uselessness. It's like saying, "You don't understand that contract because you are illiterate? Well, then don't enter into any contracts. Good luck with life." That's not empowering people to become better, and helping people help themselves is something I believe in. I am somebody who has a good credit rating and who worked hard to get it. I don't have any credit card debt because I have not given in to the "buy now/pay later" mentality so prevalent in our materialistic culture. I've also had pretty steady employment and health insurance to guard against going into debt. But I also know that as a middle-class white kid growing up in suburbia, I have a lot of things already going my way that many people don't. I'm proud of what I have done, but at the same time I'm not going to sit back and tell everybody else to pull themselves up by their bootstraps before I will consider how to help them. Because in the long run, I think the damage from predatory lending outweighs the benefits of whatever profits banks might get from the practice. Whether we need this kind of ordinance is a good question. If this has been tried in other municipalities, and it sounds like it has, I think we need to know what has happened. Has predatory lending diminished? Has homeownership risen? Have banks pulled out of markets entirely in protest? If these ordinances don't have any measurable benefits, then it would be pointless to pass one here. If, however, they do correct a market aberration with minimal cost, then I think the benefits to the community would make it worth our while. Allowing people to own their own homes without an unfair, crushing debt burden seems to me like the right thing to do. -- Nathan Hunstad CARAG Minneapolis, MN PGP DH/DSS public key -- http://www.angelfire.com/mn/freakpower/nhpubkey.txt ________________________________________________ Do you Gonzo?! http://www.angelfire.com/mn/freakpower REMINDERS: 1. Be civil! Please read the NEW RULES at http://www.e-democracy.org/rules. If you think a member is in violation, contact the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. For state and national discussions see: http://e-democracy.org/discuss.html For external forums, see: http://e-democracy.org/mninteract ________________________________ Minneapolis Issues Forum - A Civil City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[email protected] Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls
