“Access to Credit Means Access to the American Dream”
September 2, 2008 | customers, industry, positive media coverage | Comments (1)The Times News of Virginia and Tennessee writes an a report released by the American Legislative Exchange Council (ALEC). The report concludes that “Lawmakers should allow the private sector to grant loans to people with poor credit and give them options that may help them build their credit.”
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Access to Credit Means Access to the American Dream
Yes, with that payday loan I’ll be able to buy me a house.
Once upon a time access to the American Dream also required people to save first and delay gratification. Lenders would only let you borrow money if your credit was good and they assessed your ability to repay.
But then came financial deregulation and saving became old fashioned. So did delayed gratification. We were allowed to buy the American Dream even if our credit was lousy and we couldn’t afford the price. Lenders stopped asking us to document our capacity to repay. They just charged a premium for not asking.
The bubble grew and grew, then it burst. It turns out that we couldn’t defy the laws of gravity forever.
People figured out all over again why almost every society that has ever existed constrains credit transactions. Experience taught those societies that without limits, bubbles form, debt peons multiply, and creditors take advantage of people who are short sighted and desperate.