Principles in Practice: The Blog of the Objective Standard

Friday, March 30, 2007

Lenders Are Damned If They Lend--and Damned If They Don't

Posted by ARI Media at 2:22 PM

Dear Editor:

With 2 million homeowners defaulting on their mortgage payments, we are increasingly hearing denunciations of lenders for having loaned money to people who had no means of paying it back. But these denunciations reveal a disturbing double standard. For years, politicians pressured lenders to not discriminate against those with poor credit history and shaky finances. Now we have the despicable spectacle of politicians accusing lenders of not having discriminated enough and of having made too many risky loans.

Lenders are damned if they lend—and damned if they don't. Whatever lenders do, politicians seem to always find their practices objectionable, and will take advantage of any excuse to call for more regulations and increased political power over lending. Politicians should leave lenders alone, and instead of damning them, they should acknowledge their crucial role in making home ownership possible for so many people.

David Holcberg
Ayn Rand Institute

Labels: Business and Economics