March 07, 2005

Dealing With The Lending Industry

Good for those conservatives who are opposing the awful bankruptcy bill now wending its way through Congress. At the same time, though, I wonder what a real conservative/free marketer/libertarian would propose to do about the credit-card industry. Lending abuses aren't new, and card companies certainly don't need congressional handouts to work their predatory magic. Companies like Citigroup, after all, make a good chunk of their profits off of loans with absurdly high rates to those least able to afford it (the poor or the debt-laden); this is the free market in action! Short of heavy regulation or a return to the old usury laws regulating interest rates (which I think just peachy), the lending industry will do what it does.

Alternatively, I guess, you could make it much easier for people to declare bankruptcy, which would certainly give credit-card companies pause before handing out cards with $10,000 limits and whopping fees to the cash-strapped. But most conservatives, I assume, would balk at all the moral hazards created here. So what's the answer?
-- Brad Plumer 3:01 AM || ||