Should creditors be more aggressively regulated?

Question

I heard an interesting statistic that Americans spent more money than they made in 2005 and that is the first time it has happened since the great depression. Creditors are irresponsibly lending more and more money to less qualified people and charging them higher rates, more penalties. The result of all these people buying things that they cannot afford is driving prices upward and creating a cruel and damaging cycle. Agree?

Answer 1

Yes and No. On one hand, its like blaming yourself for trusting that your friend is going to pay you back and doesn't. Americans are responsible for their own spending habit and should regulate themselves in how they spend and what liabilities they incur. The higher rates are a result of a risk assessment and not dirty tactics. Creditors however are responsible for their own business decisions and should not be bailed out by the government. That's business. I don't think government should get involved in either bailing them out or trying to prevent them from having to be bailed out. Viva la free market system!

Answer 2

Why would banks lend $ to people that they didn't believe were qualified?? That makes no sense. If someone doesn't pay, the bank incurrs the expense of foreclosing on the house and auctioning it off to try to recoupe some of the outstanding loan.. The banks are losing $ in this whole "cycle" as well. Predatory lending laws prohibit the lenders from charging customers ridiculous rates and fees to protect the customers, but in the end, if the banks aren't makinig $ on the loans, they won't make loans to people.

Answer 3

Government regulation is not the answer... when was the last time you saw the government do something really well?

I think the answer is people educating themselves on finances and waiting until they can legitimately afford something before they go getting into shady deals with a lender. The lenders have already been regulated and the terms of the agreement have been spelled out in writing before the borrowers sign. The old saying is still true... buyer beware.

Answer 4

Laisez Faire or administration financial gadget that's the question. i'm a believer that the industry will allocate components interior the greatest way, yet Governments ought to have a hand on the Tiller to make certain massive company would not experience tough shod over the social well being and well being of its human beings. company regulation is a needed evil in any different case we are able to have extra ENRONs, Petrol Refinery mess ups, Hatfield prepare crashes, Bopal's, and so on and so on. crimson Tape is undesirable, yet minimum well being & risk-free practices standards are good. minimum wages at the instant are not uncomplicated to call, yet administrators multi million pay offs for non overall performance are undesirable. Capitalism can force good issues like invention, ambition, a artwork ethic and so on, yet may additionally convey approximately greed and a disassociation from community, whilst communism is a gorgeous theory that is shown to be fundamentaly floored simply by human nature. i might advise that social capitalism is a clean way - working not uncomplicated to income not basically you and yours, yet those on your community. You in no way be attentive to it may desire to seize on....

Answer 5

The creditors are one step away from loan sharks. Why do think they put all that small print in there that no one can understand? As far as I am concerned, they get what they deserve, and a lot of people will default. Watch and see.

Answer 6

No. Creditors are not the irresponsible ones in a case where someone is spending more than they earn. An industry should not have to suffer due to the ignorance of its consumers.

Answer 7

caveat emptor. Ever heard of it?

Since when is it the "Governments" responsibility to determine if you or anyone else can use your credit card, or any other loan for that matter, in any way you desire.

No one is being "forced" to go into debt. Most simply have limited control on their finances.

Answer 8

No one is forcing people to accept easy credit. It's about time that Americans learn to handle their own financial situations, and quit blaming 'easy credit' for their financial woes.

Answer 9

well, it certainly happened in houses in many areas of America.

now the houses are overpriced and way too many of the "owners" can't make the payments -- so you have Northern Rock which, rather foolishly, bought someone else's problems.