Re:Regulating Big Tech makes them stronger, so they need com...
by AnthonyMouse on Tuesday November 05, 2019 @02:35PM
(#21455825)
> The idea that the banks didn't want to make those loans and only did it to meet regulatory standards is incompatible with the belief that the regulation was co-oped for the benefit of the banks.
Keep in mind that there is more than one lobby group. A big force behind "give more loans, everybody should own a home" is the National Association of Realtors.
So the banks don't want to give the loans (because they know there will be defaults) but the Realtors want them to; the "compromise" is to move the risk away from the banks.
The law was a moral hazard -- move the risk from doing something stupid risky onto somebody else and of course the banks are going to do it then. It was what we "wanted" them to do, which is apparently why the people enacting it didn't think too hard about why they didn't want to do it on their own.
Keep in mind that there is more than one lobby group. A big force behind "give more loans, everybody should own a home" is the National Association of Realtors.
So the banks don't want to give the loans (because they know there will be defaults) but the Realtors want them to; the "compromise" is to move the risk away from the banks.
The law was a moral hazard -- move the risk from doing something stupid risky onto somebody else and of course the banks are going to do it then. It was what we "wanted" them to do, which is apparently why the people enacting it didn't think too hard about why they didn't want to do it on their own.