When both borrowers and lenders act irresponsibly, isn't it time for lending reform?

Question

In the early 20th century, many coal mining companies required miners to live in company owned homes and shop in company owned stores.
Miners were extended unlimited credit in the company stores. The end result was that miners owed their souls to the company store. They worked their entire lifetime paying off their debt to the company and ended their working career in poverty.
Credit companies today are putting Americans in the same postion. The huge credit debts being allowed today will create a population of poverty stricken elderly in the future.
Credit companies are being irresponsible in their credit practices. Borrowers are being irresponsible in their debt creation. When irresponsibility exist at both ends, shouldn't government regulation intervene? Or, should we just wait until we have to support thru public funds a generation of impoverished elderly?

Answer 1

That was long before education was the Norm in America. Sorry if you sign for $800,000.00 mortgage and make 23K I do not believe we need yet another Law......

Answer 2

I agree that debt is very dangerous and destructive when used irresponsibly.

However, you must realize the unintended consequences of government action on this issue. The only accomplishment of government intervention would be to limit the access to credit of the poor and those with bad credit. This group is often the type that needs credit more than most. By the government imposing its will, this group will either no longer have access to much needed credit, or credit will be prohibitively expensive.

And given the implosion of the sub-prime credit industry, I would say that investors have likely learned a lesson that will guide them to more responsibility in future lending decisions.

Answer 3

Legislation is already in the offing. Investigators have determined that the problems are due in large part to predatory and double-dealing practices of the sub-prime lending industry, who were found to be making deals of one sort and then switching the terms at the last minute, apparently to increase revenues to recoup losses due to making bad lending decisions in the first place. So it isn't just would-be home owners who have been overextending themselves.

Answer 4

We have good laws that are not enforced.

Any credit, finance, mortgage, bank, or investment company that deliberately misleads borrowers should be prosecuted by the Attorney General.

Answer 5

There is no amount of legislation that will prevent people from acting stupid. The market is correcting itself now . . .

Answer 6

No, it's just a wake up call for people trying to live beyond there means.

Answer 7

Yes, I agree that both borrowers AND lenders should be made to act responsibly, even if it's through government intervention of some sort.