MT says: so it IS about information and education, on the part of lenders and lendees? If the banks had the proper information and the lendees had the proper information, this wouldn't be an issue.
Right, but they don't. If you've got a way figured out to make sure both sides have access to all the same information in real-life situations, there are people in Sweden who'd like to reward you, because nobody else can. And some of the anti-predatory lending laws are about information - they set requirements for how information must be presented, to increase the likelihood that both sides have some chance of knowing the same things.
I don't have a problem with Wells Fargo charging one rate on Monday and a different on Tuesday if that's what they want. I don't have a problems with them charging a different rate at the Chaska branch compared to the Chicago Avenue branch. It's their money to lend out. They can charge whatever they want and whatever the market will bear. This has always been my point: if one doesn't like the rate because of where the loan originated, originate a loan at a different place. Loans are a commodity, a marketable product and as such can be sold to comsumers in a manner in which the market will bear.
Yes, a bank can charge different rates on Monday and Tuesday, but it is not legal for one bank to charge different rates on Monday for people with the same credit rating depending on whether they apply at a Chaska branch or a Minneapolis branch. That's redlining.
If you've read my posts, I have also repeatedly said that deception is not OK with me. I agree that deception is unethical. But charging an interest rate that the market will bear is not. Not disclosing all terms on a loan is deceptive and unethical. But, last time I checked, loan disclosure statements are quite clear what interest rates are, how much money is going to interest and principal on a loan, etc. But you mix terms in a deceptive manner yourself.You seem to state that it is some kind of undue burden on the lendees, "those who are trying to put food on the table" (a hyperbolic statement), because they may have to read a couple of forms that outlines what they're signing. Let's be clear: deception is not OK, but just because the process is complicated does not mean that it is necessarily unethical.
Michael Hohmann points out that there seems to not be a differentiation here between predatory lending and sub-prime lending. I'm not talking about sub-prime lending, which charges higher rates to those with poor credit histories.
So let's have a definition of deceptive. I'm going to say anything that violates state law is de facto deceptive. If I enter into a legal contract with a bank, I have the expectation that the bank is compliant with the law. That's rule of law, and it keeps transaction costs low, which increases the efficiency of our economy. Ronald Leurquin makes this point when he writes: "I for one, do not want to live in a society that I have to know everything about everything in order to make decisions. When would I ever get work done to make the money needed to buy anything?"
I submit that Wells Fargo does not deny that its practices were in violation of state laws; they maintain they are exempt from state laws. Thus Wells Fargo was (I don't know enough to say "is") engaged in deceptive practices. Citigroup was too, until they changed their ways after a lawsuit by the FTC. The question of exemption from state laws is one that was settled until the mid-1990s, when federal regulatory agencies began fighting state consumer protection laws on behalf of national banks. This is despite the fact that Congress has said that federal banking regulations do not preempt state consumer protection laws. If all businesses were allowed to proceed as if state laws don't apply to them unless the state can make the laws stick in court, our economy would break down. And that's exactly what the national banks have done.
In other cases, anti-predatory lending laws define as deceptive such practices as closing a loan for which monthly payments exceed 50 percent of the borrower's monthly gross income, or closing a loan without verifying income. There are further examples of deceptive practices at www.responsiblelending.org.
I don't think it's hyperbolic to point out that what we really are talking about here is taking advantage of people for profit. And having said that, I am tapped out on an issue I don't know that much about other than as federal preemption of state laws, and anyone else is welcome to have the last word.
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