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- #81
A loan shark is no one's savior.
You're missing the point. Who we call a "loan shark" is a matter of opinion. How high is too high when it comes to interest rates? As others here have pointed out, being willing to pay higher interest rates is sometimes the only way a person with poor credit can get a loan. Setting legal limits on that is, essentially, setting legal limits on who has access to credit.
Let me put this to you:
I would argue that risk is shared.
If someone buys the house next door to mine, but goes bankrupt and the house falls into disarray and stays vacant, MY property values suffer.
Should there not then be some mechanism to protect me from the foolish risks taken by others? Should the irresponsible behavior of others cost me?
However distressing and unfortunate this situation may be, the only remedy for this situation is for the federal government to stay out of it EXCEPT for requirements of sound money management by the banks. That means the government no longer bullies, threatens, or coerces banks into making risky loans to 'poor' people but insists that the banks return to sound lending practices. Home loans will be made to people who save up for a down payment, who are responsible to pay their debts on time, and who earn enough money to realistically be able to pay their mortgages.
People who have worked hard and developed the discipline to save and have a substantial investment in their homes, as well as having demonstrated the integrity of being honorable in paying their debts are not going to default on their mortgage except in very rare and unusual circumstances..
People who have little or no investment in their homes and little or no credit rating to protect are far more likely to not care if they default on their loans because they don't have anything to lose, most especially if they know the federal goverment may bail them out if they get into trouble.