“Treat borrowers like adults”
July 8, 2009 | Wall Street Journal, alternatives, federal legislation, industry | Comments (1)How profound. A great piece in the Wall Street Journal today by Todd J. Zywicki, professor of law at George Mason University:
The idea of a financial product safety commission comes from Elizabeth Warren, a Harvard Law professor and the chairwoman of Congress’s oversight panel for the Troubled Asset Relief Program. She says that such a commission is necessary because consumers cannot buy a toaster that has a one-in-five chance of exploding, but they can get a subprime mortgage that has a one-in-five chance of ending in foreclosure.
But this simple-minded analogy misses the point. An unsafe toaster is a hazard to anyone who buys it. That’s not true for loans.
Comments»
Great article. Sub-prime rates are a small piece of the puzzle and nowhere near the real reason for foreclosures.
The day that buying a house became a zero risk, is the day everything went in the crapper.