Making Interest Rates Fun
In the annals of obscure news that shouldn't surprise anyone, the Washington Post discovers
that subprime lenders discriminate against minorities, slipping their victims painful penalties, fees, and other assorted non-niceties. (Subprime loans are offered at higher interest rates to borrowers with high credit risk.) Odds are they also discriminate against the elderly and the poor, maybe even the sick little children.
But we knew all that. The question is: What Is To Be Done? Well, Congress could try to hunt down and destroy all instances of predatory lending. Slap down a law making balloon mortgages illegal. Not enough? How about half-balloon mortgages. Not enough? And then… and then… The downside is that financial companies are very smart, and can always come up with new ways to prey on their unsuspecting victims. Nothing sparks creativity like coming up with ways to screw black people over. An alternative would simply be to bring back the old usury laws
and start regulating interest rates again. Obviously this means that a lot of people with risky credit or low-incomes will no longer be able to get loans quite so easily. But with debt skyrocketing and bankruptcies climbing with no end in sight, is that a bad thing? I don't know. Certainly it would stop the "great" credit card offers that get shoved through my mail-slot every day, but that's probably not the way to do public policy.