Kip's Law Sighting: Professor Alan M. White
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On why any central planner worth his salt should advocate banning subprime mortgages:
And the fact that not every foreclosure "victim" is a family (in fact many or most are speculators with multiple loans covering multiple properties, many of which are empty or even unfinished). Indeed, as I noted previously, often the borrower is not the victim but the victimizer.
And, most importantly, the fact that if even one competent consenting adult wants to take out a subprime loan, and even one lender wants to offer a subprime loan, then both ought to left alone to do so.
--All the loans that are not in default? Blank out.
--All the properties not in foreclosure? Blank out.
--All the property values not declining? Blank out.
--"Social and fiscal impact"? Impact to whom? Defined how? By what standard?
--"Unnecessarily" high rates? Unnecessary to whom? By what standard?
--"Reasonable" interest rate limits? Reasonable to whom? By what standard?
No, all that matters is that some nebulous, arbitrary, subjective measure of "welfare harms" should give politicians, bureaucrats -- and their codependent law professor enablers -- sanction to restrict freedom of contract for all.
Kip's Law: Every advocate of central planning always -- always -- envisions himself as the central planner.
The welfare harms caused by subprime mortgage lending are readily measurable. They include the direct impact of more than two million foreclosures on families, the resulting property value losses, the social and fiscal impact on cities where subprime mortgages were concentrated, the price discrimination resulting in black and Latino homeowners paying unnecessarily high rates, and the broader impacts on the credit markets and the economy.Of course, the utilitarian gobbledygook term "welfare harms" conveniently blanks out the fact that the overwhelming majority of subprime mortgages are not only not in foreclosure but also not even in default.
The disastrous consequences of subprime mortgage lending were in part the result of deregulating mortgage interest rates. Similar harms can be prevented in the future by reimposing reasonable interest rate limits on first-lien mortgages.
And the fact that not every foreclosure "victim" is a family (in fact many or most are speculators with multiple loans covering multiple properties, many of which are empty or even unfinished). Indeed, as I noted previously, often the borrower is not the victim but the victimizer.
And, most importantly, the fact that if even one competent consenting adult wants to take out a subprime loan, and even one lender wants to offer a subprime loan, then both ought to left alone to do so.
--All the loans that are not in default? Blank out.
--All the properties not in foreclosure? Blank out.
--All the property values not declining? Blank out.
--"Social and fiscal impact"? Impact to whom? Defined how? By what standard?
--"Unnecessarily" high rates? Unnecessary to whom? By what standard?
--"Reasonable" interest rate limits? Reasonable to whom? By what standard?
No, all that matters is that some nebulous, arbitrary, subjective measure of "welfare harms" should give politicians, bureaucrats -- and their codependent law professor enablers -- sanction to restrict freedom of contract for all.
Kip's Law: Every advocate of central planning always -- always -- envisions himself as the central planner.
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Posted by Kip on
1 January 2008
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