There’s been plenty of blame placed on home lenders, and that’s led to a call for more regulation by many politicos.
But what about the borrowers who agreed to the loans’ terms and the cost of any regulatory action enacted to protect these borrowers?
Barbara Kiviat disregarded those key points in her article “Ground Zero of the Real Estate Bust,” published in the August 27 issue of Time. She suggested there was a predatory element involved meant to lure the unsuspecting “addictive” borrower to get in over his head.
“Still, the EZ Credit addiction is tough to cure,” wrote Kiviat. “Drive through Green Valley Ranch, and you still see signs for 0 DOWN PAYMENT, 100% FINANCING.”
She touted the laws enacted in Colorado meant to “protect the borrower,” but ignored any heightened cost associated with such legislation.
It’s not likely the lender is going to catch any breaks on the regulatory side or in the court of public opinion, said one expert.
“Just think about it – if it is a giant mortgage banker versus a family being put out of their home – no matter what the fact pattern may be after that, who wants to take those odds?” said Jerry Bowyer, author of “The Bush Boom,” to the Business & Media Institute. But, the bandwagon for more regulation is loading up.
In Monday’s Financial Times, Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, wrote an op-ed advocating more regulation.
“In the debate between those who believe in essentially unregulated markets and others who hold that reasonable regulation diminishes market excesses without inhibiting their basic function, the subprime situation unfortunately provides ammunition for the latter view,” wrote Frank.