Geoffrey MillerVerified account

Yes I know. I'm making a conceptual point, not a financial model.

These are predatory loans plain and simple. No, they should not be permitted to borrow the money, nor should the banks be permitted to make the loans.

So, if someone needs to borrow money to avoid catastrophe (repossession, foreclosure, medical bills, etc), the government should not permit them to do so at a fair interest rate that accurately reflects their probably of default? You'd rather they lose their car, house, or life?

I learned this from an SNL skit in the 80's and it seemed obvious to me. Unfortunately, it doesn't translate into the real world. Humans in general lack impulse control and banks take advantage. It's the definition of a predatory loan.

Unintended consequences: 1: Fewer people will be given credit cards. Bad credit score folks (aka, proven high risk of never paying back the $) will simply not be offered a card. Access to credit is a huge benefit, and this law would force it to be enjoyed only by the rich.

2: If somehow the government also forced those with bad credit to get cards too, we would probably see an increase in credit card debt, since people would be MORE MOTIVATED THAN EVER to borrow, especially those who would previously never have access to those rates.

This comment baffles my mind beyond belief. It’s bad enough we have the Fed messing around with rates. Now to have congress dictating what’s left of free market rates? Pass.