Mortgage Lending: "I'm From Harvard and I'm Here to Help"
Posted on September 1st, 2007 by Kip
A comment I left at another blog regarding a proposal to ban prepayment penalties on mortgages:
It takes a special kind of arrogant, “central planner wannabe” mentality to insist that restricting the ability of competent consenting adults to enter into strictly private contracts with one another actually makes them better off.It’s cute when such malcontents lament having “too many toothpastes,” but when they set their sights on the financial markets, it’s time to get very, very nervous.
As I’ve blogged previously:
If there are anecdotal cases of institutions engaging in false advertising, deceptive accounting, manipulating the legally incompetent, then fine — pursue them with the full force of the law. But the mere fact that many otherwise competent people, including financial professionals, happened to make very bad decisions is no claim check on the Fed, Congress, or taxpayers’ wallets.
Neither is it a license for regulators to “save from themselves” those who are in no way caught up in the current subprime turbulence.
Similar Posts:
- I’m From the Government and I’m Here to Turn You Into a Welfare Bum
- Is There a “Right” to a Competitive Mortgage?
- Kip’s Law Sighting: Professor Alan M. White
- Whose “Liquidity Crisis” Is It?
- Yet Another Faux Externality Anecdote
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When I bought my house, I made certain that my mortgage had no pre-payment penalties. I've educated myself in finance enough over the last 15 years to understand such not-complex issues, but everyone capable of getting a mortgage is capable of doing their homework. If they don't want to, or can't get a mortgage without a term they don't like, they can walk away. As you say, it's private and voluntary. That's enough.