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Increased regulation of subprime mortgage loans

Gary Becker and Richard Posner consider whether calls for increased regulation of subprime mortgage loans will do more harm than good. In his typically esoteric and comprehensive style, Posner points to this latest debate as being part of a continuum of concerns over the morality of charging interest that date back to Medieval Christianity. Both place faith in the opportunities provided by markets and the availability of commodities people want, and view the questionable morality of some subprime lenders as being a relatively small factor in the present default rate. Says Posner: "For government to place a ceiling on price prevents people from buying the commodity who would be willing to pay a higher price, and thus it prevents a mutually beneficial, and therefore value-maximizing, transaction."



Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.